Total US new vehicle sales for August 2024, including retail and non-retail transactions, are projected to reach 1,437,954, a 4.2% increase from August 2023 on a selling day adjusted basis, according to a joint forecast from JD Power and GlobalData.
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August 2024 has 28 selling days, one more than August 2023. Comparing the same sales volume without adjusting for the number of selling days translates to an increase of 8.1% from 2023.
The seasonally adjusted annualised rate (SAAR) for total new-vehicle sales is expected to be 15.3 million units, down 0.1 million units from August 2023.
New vehicle retail sales for August 2024 are expected to increase from a year ago. Retail sales of new vehicles are expected to reach 1,209,800, a 6.8% increase from August 2023 when adjusting for selling days. Comparing the same sales volume without adjusting for the number of selling days translates to an increase of 10.8% from 2023.
Thomas King, president of the data and analytics division at JD Power said a key element of the improvement is that this year, the Labor Day holiday weekend falls within the August sales reporting period instead of September where it normally falls.
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By GlobalData“While the sales results for August will be positive, the seasonally adjusted annualized rate (SAAR), which corrects for Labor Day timing, is relatively modest at just 15.3 million units,” he said.
“The modest August SAAR reflects the trade-off between key factors: discounts from dealers and manufacturers are rising while average transaction prices are falling. As a result, the sales pace should improve. However, inventory—while rising for the industry as a whole—remains lean for some high-volume brands, which is limiting their sales pace. In addition, used-vehicle values continue to fall, which means buyers returning to showrooms have less equity in their trade-ins.
“Furthermore, the industry is still grappling with the effects of reduced leasing activity from three years ago. Fewer leases signed then mean fewer lessees are returning to dealers to purchase or lease a new vehicle today. The number of expiring leases decreased 8.4% from July and decreased 16% from August 2023. With fewer lease customers returning to the market, there are fewer opportunities for new sales.
Transaction prices falling
JD Power also said average new vehicle retail transaction prices are declining from a year ago due to higher manufacturer incentives, larger retailer discounts and rising availability of lower-priced vehicles.
Transaction prices are trending towards $44,039—down $1,895 or 4.1%—from August 2023. The combination of higher retail sales and lower transaction prices means that buyers are on track to spend nearly $50.7 billion on new vehicles this month— 6.3% higher than August 2023.
That means dealer profits are down, too.
“Total retailer profit per unit—which includes vehicles gross plus finance and insurance income—is expected to be $2,249, down 33% from August 2023,” said King. “Rising inventory is the primary factor behind the profit decline and fewer vehicles are selling above the manufacturer’s suggested retail price (MSRP). Thus far, only 13.0% of new vehicles have been sold above MSRP, which is down from 31.2% in August 2023.”
JD Power says manufacturer discounts are continuing to rise. The average incentive spend per vehicle has grown 59.5% from August 2023 and is currently on track to reach $3,035. Expressed as a percentage of MSRP, incentive spending is currently at 6.2%, an increase of 2.3 percentage points from a year ago. Spending has increased by $18 per unit from July 2024.
King said: “One of the drivers of higher incentive spending from a year ago is the increased availability of lease discounts. This month, leasing is expected to account for 24.2% of retail sales, up 3.8 percentage points from 20.4% in August 2023.”
The calendar that gives an August Labor Day boost also means payback in September.
“In September, sales volumes are expected to be lighter than the previous year due to the Labor Day holiday weekend falling within the August sales reporting period. With that, all eyes will be on interest rates and the anticipated changes that could help new vehicle affordability through the end on the year,” said King.
