New vehicle sales to fall in November while prices rise

 

DETROIT, Mich. — New-vehicle retail sales in November are expected to fall from a year ago, according to a forecast developed jointly by J.D. Power and LMC Automotive. Retail sales are projected to reach 1,096,500 units, a 3.8 percent decrease compared with November 2017 on a selling day adjusted basis.

“While the continued decline in retail sales is disappointing, record transaction prices remain an encouraging indicator for the long-term health of the industry,” said Thomas King, senior vice president of the Data and Analytics Division at J.D. Power.

Meanwhile, the average transaction price in November is on pace to reach $33,697, the highest level ever recorded. The record prices reflect higher prices trending for both cars (up 4 percent to $27,407) and trucks/SUVs (up 1 percent to $36,123), coupled with the ongoing shift in sales from cars to trucks. So far this month, trucks/SUVs account for 71.2 percent of retail sales, compared with 66.6 percent in November 2017.

Incentive spending also is on pace to decline on a year-over-year basis for the fifth consecutive month. November to-date spending is $3,783 per unit, down $285 from the same time last year. Spending on cars is down $784, while spending on trucks/SUVs is down $48.

“Strong transaction prices and lower incentives are helping maintain manufacturer profitability despite the decline in sales,” King said.

Thanksgiving weekend is one of the busiest selling periods of the year and is expected to account for nearly 20 percent of November sales. The long weekend also coincides with the launch of incremental incentives tied to year-end sales events, which present manufacturers with the challenge of maintaining incentive discipline exhibited over the past five months. All indications are that incentive spending will remain below year-ago levels, although in absolute terms, incentives remain high.

“With average discounts equal to 9.6 percent of MSRP in November, consumers still have plenty of opportunity to purchase a new vehicle at a significant discount,” King said.

Jeff Schuster, president, Americas Operations and Global Vehicle Forecasts at LMC Automotive, said, “Volume for the year is holding consistent with 2017 but, as the industry plans for a prolonged and significant investment period in future mobility without a return, cutbacks are being made that could affect near-term planning and future programs. Next year will bring a new challenge for the industry and some familiar ones like trade and rising interest rates.”

LMC’s forecast for 2018 total light-vehicle sales remains at 17.2 million units, but has slipped to just 22,000 units higher than 2017. The retail light-vehicle forecast remains at 13.8 million units, a decline of 1 percent from 2017. Fleet volume remains the growth engine with volume expected to be 5 percent higher and representing 20 percent of total light-vehicle sales. For 2019, the forecast for total light-vehicles is at 17.0 million units and retail light-vehicle sales is at 13.7 million units, each declining 1.3 percent from 2018.

SOURCE: J.D. Power

Ronnie Wendt

Ronnie Wendt

Ronnie Wendt has been a writer/editor for more than 25 years, working in law enforcement, aviation, supply chain and the RV industry. She's not a stranger to RVs, however. She grew up camping, and still camps as many weekends as she can every year. She is the owner of In Good Company Communications and can be reached at ingoodcompanycommunications@gmail.com.

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