For the first time in three years, the average days to turn (the number of days a vehicle sits on a dealership forecourt) for the US new vehicle retail market has consistently been less than 60 days, even as new vehicle transaction prices rise, according to the Power Information Network (PIN), a division of JD Power and Associates.

The PIN data excludes fleet deals and concentrates on retail only.

While days to turn varies from one vehicle manufacturer to another, the average days to turn for the industry has been less than 60 days in each of the past eight months, from September 2005 to April 2006. The previous time period this occurred was from June 2002 to January 2003. Although new vehicles are spending less time on the forecourt, transaction prices (vehicle price less customer cash rebates) have increased when compared to the same month a year ago for 23 consecutive months since June of 2004.

"The steady increase in the price buyers paid for their new vehicles and ongoing low days to turn both lend themselves to increased profitability for the retailer and the manufacturer," said PIN senior director of industry analysis Tom Libby. "Despite the doom and gloom we frequently read about-perceived rising fuel prices, global political uncertainty and struggling domestic auto manufacturers, the data show that in some respects, the US new vehicle industry is doing well."

The turn rate for some segments is particularly low. In April, the entry compact car segment had an average days to turn of only 38 days, due in part to the successful launches of the Toyota Yaris and Honda Fit [Jazz]. Premium compact cars sat on dealer lots an average of 44 days, benefiting from the success of the newly launched Dodge Caliber, the redesigned 2006 Honda Civic, the 2006 Chevrolet HHR and the Toyota Prius, among others. At the other end of the price spectrum, the premium luxury car segment had an average turn rate of just 35 days in April, with the BMW 7-series and redesigned Mercedes-Benz S-class having exceptionally low turn rates.

The recent increase in new vehicle transaction prices can be partially attributed to a gradual decline in the use of customer cash rebates. The average rebate has declined every month this year when compared with the same month a year ago.  Additionally, the percentage of transactions including a rebate has also decreased slightly in every month.  In April 2005, for example, 57% of transactions included a rebate. In April 2006, however, 53% of transactions included a rebate.

"The absence of excessive inventory - which has plagued automakers in recent years - could mean that the mid-year incentive programmes that have occurred in the past to drive sales will not be necessary this year," said JD Power chief economist of global forecasting Bob Schnorbus. "While this is positive for the industry, it may not be good for consumers who are anticipating generous incentives when shopping for a new vehicle this summer."