US auto sales fell in July but not dealer profits

image credit:

New car sales numbers in the US fell significantly last month compared to a year ago. But the profits of traders are not hurt because higher prices boost profits.

A joint forecast from JD Power and LMC Automotive forecast retail sales of new vehicles last month to reach 988,400 units. That’s about 11 percent down from July 2021 when adjusted for sale days. July of this year had a lower selling day compared to last July – when it wasn’t adjusted, sales volume was down 14.1 percent from 2021.

explained Thomas King, Head of Data and Analytics at JD Power. “This month, 55 percent of vehicles will be sold within 10 days of arriving at the dealership, while the average number of days a new vehicle is in the dealer’s possession before it is sold is on its way to 19 — down from 29 days a year ago.” .”

In the meantime, prices are still at record levels. The average transaction price is expected to be $45,869, an increase of 12.3 percent over last year. This is the second highest number recorded.

“July is another month in which supply constraints are keeping auto sales artificially low, but it is bringing record transaction prices and dealer profitability,” King said.

With inventory short, deals and discounts are not offered by auto makers and dealerships. King reports that the average incentive spend per vehicle comes in at less than $900, a drop of about 55 percent from last year.

“This will be the third month in a row for less than $1,000 and the first time under $900,” he said. “One of the factors that contributed to the reduction in incentive sending is the lack of discounts on rental vehicles. This month, rentals will make up just 17 percent of retail sales. In July 2019, leases accounted for 29 percent of all new retail car sales.

What will next month look like?

“In August, the industry’s overall sales pace will remain constrained by procurement, production and distribution challenges,” King said. “Consumer demand remains significantly higher than supply, all of which points to a continuation of the current market dynamics of low sales volumes but record prices and profitability.”

Leave a Reply

%d bloggers like this: