September US Auto Sales Decline Amidst Supply Challenges
US Auto Sales Expected to Decline in September
New vehicle sales across the United States are anticipated to see a decline of approximately 1.8% in September compared to the same period last year. This dip is largely attributed to three fewer selling days in the month, according to insights from industry analysts at J.D. Power and GlobalData.
Analysis of Seasonal Trends
The seasonally adjusted annualized rate, known as SAAR, indicates that sales of new vehicles are projected to remain steady at around 15.8 million units. Despite this stability, the overall market is grappling with various challenges.
Inventory Levels and Transaction Prices
One of the significant factors influencing this situation is the increasing vehicle inventory, which is prompting manufacturers and retailers to offer larger discounts. Consequently, transaction prices are on the decline.
Impact of Leasing Activity
The market has also been affected by a drop in leasing activity observed three years ago. With fewer leases initiated in that period, there are not as many customers returning to dealerships to explore new purchase or leasing options.
Sales Volume and Profit Trends
For September, the total number of new vehicle sales — which encompasses both retail and non-retail transactions — is projected to decrease by about 1.8%, totaling approximately 1,164,900 units compared to the previous year. When not accounting for the number of selling days, this volume suggests a significant 13.2% decline from the year 2023.
Shifts in Consumer Preferences
Transaction prices are moving toward an average of $44,467, which represents a decrease of $1,296 or 2.8% from the previous year. Interestingly, the average incentive spend per vehicle has surged by 63.2%, signaling a shift in how dealerships are trying to attract buyers.
Profitability Challenges for Retailers
Retailers are facing pressure as total profit per unit, which encompasses gross income from vehicle sales as well as finance and insurance revenue, is projected to drop to $2,249 — a 29% decline compared to September 2023.
Consumer Interest in Electric Vehicles
Amidst these trends, consumer interest in electric vehicles (EVs) has reached a concerning low. Only 21.7% of new vehicle shoppers expressed a strong inclination toward considering an EV for their next purchase, marking a 4.2 percentage point decrease from the previous year. Elizabeth Krear, vice president of electric vehicle practice at J.D. Power, has highlighted this critical insight.
Industry Perspectives on Financing
Although recent adjustments in interest rates offer some positive prospects for the industry, market experts warn that improvements in vehicle affordability will not manifest immediately. Thomas King, who is the president of the data and analytics division at J.D. Power, indicated that the benefits of lower annual percentage rates for both manufacturers and retailers may take time to fully materialize.
Frequently Asked Questions
What caused the decline in US auto sales for September?
The decline is mainly due to three fewer selling days and a decrease in consumer interest in purchasing new vehicles compared to last year.
How much are transaction prices expected to drop?
Transaction prices are trending downward to approximately $44,467, reflecting a reduction of 2.8% from the previous year.
What are the projections for total vehicle sales this September?
Total new vehicle sales for September are expected to be around 1,164,900 units, a 1.8% decrease from last year.
What impact does leasing have on vehicle sales?
Reduced leasing activity from previous years means fewer customers are returning to dealers to purchase or lease new vehicles, impacting overall sales.
Is there still interest in electric vehicles?
Interest in electric vehicles has significantly dropped, with only 21.7% of shoppers indicating they are very likely to consider buying one for their next vehicle purchase.
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