U.S. auto sales are expected to fall 1.8% in September, according to a report from J.D. Power and GlobalData, largely due to three fewer selling days compared to last year. This brings the projected seasonally adjusted annualized rate (SAAR) of new vehicle sales to 15.8 million units, remaining flat from a year ago. Rising inventories have led to larger discounts from manufacturers and retailers, causing transaction prices to decrease compared to last year.
The report also notes a significant reduction in leasing activity, with fewer lessees returning to purchase or lease new vehicles. Transaction prices have dropped by an average of $1,296, or 2.8%, with average spending on incentives increasing by 63.2%. Retailer profits per vehicle unit have decreased by 29% to $2,249, as a result of these dynamics in the market.
Market Overview:- U.S. auto sales are expected to decline 1.8% year-over-year for September.
- Seasonally adjusted annualized sales (SAAR) are forecasted at 15.8 million units, unchanged from last year.
- Rising inventories have led to more discounts and lower transaction prices.
- Average transaction prices are down 2.8% to $44,467, while incentive spending has risen by 63.2%.
- Retailer profit per vehicle has dropped by 29%, totaling $2,249 per unit.
- Electric vehicle interest has hit a yearly low, with only 21.7% of shoppers likely to consider an EV.
- Automakers may continue offering incentives as inventories rise and sales pressure increases.
- Lower transaction prices and higher incentives could signal a more competitive market for buyers.
- EV adoption trends will be key to watch as consumer interest in EVs has decreased significantly.
Looking forward, the auto industry faces challenges in balancing inventory levels, incentives, and profitability as sales slow. While manufacturers may attempt to stabilize profits through reduced transaction prices and enhanced incentives, the decrease in consumer interest in electric vehicles (EVs) could dampen EV-related growth. The report shows that only 21.7% of new-vehicle shoppers are likely to consider an EV for their next purchase, down by over 4 percentage points from a year ago.
Given the flat trajectory in SAAR and lower transaction prices, automakers will likely look to incentives and promotions to sustain demand. As these trends evolve, the broader market will keep a close eye on the profitability of retailers and manufacturers heading into the fourth quarter, particularly if the current dynamics persist.
