Sales of new vehicles in the U.S. are expected to rise in November following discounts given by car dealerships.
Total new-vehicle sales for November 2024, including retail and non-retail transactions, are projected to rise 6.7% year-over-year to 1,361,200 on a selling day adjusted basis, according to a joint forecast from J.D. Power and GlobalData.
Based on the seasonally adjusted annualized rate (SAAR), total new-vehicle sales is expected to reach 16.5 million units, which will be up by 1.2 million units compared to November 2023.
Retail sales for new vehicles is expected to increase as compared to last year. The expected retail sales is projected to reach 1,153,100, which is a 10.1% increase compared to the same month last year. When comparing the sales volume from last year and the current year without adjusting for the selling days would show an increase of 14.5% from 2023.
According to Reuters, the higher discounts and the goal of car dealerships to clear their inventories before the year ends have contributed to higher purchases of new cars. While there are still two factors that have affected the demand such as inflation and higher interest rates, the lower price tags on cars have positively made an impact on sales.
There is also an increase in the retail inventory between November 2023 and this year. The figure is projected to increase by 29.7%, which is up to 2.1 million units.
However, a decline of 21.2% in the month is expected for total retailer profit per unit. This metric is used to measure gross income in vehicle sales including insurance and finance.
The average new-vehicle retail transaction price is expected to go down by $150 as compared to November 2023, reaching $45,471. The high for any month set in December 2022 was $47,329.
As to the average incentive spending per unit, it is expected to reach $3,291, which is up $978 compared to the same month last year. Spending as an average of the manufacturer’s suggested retail price (MSRP) is expected to increase by 1.8 percentage points, at a rate of 6.5%.
For trucks/SUVs, the average incentive spending is expected at $3,431, increasing by $988 from last year, while on cars, it is at $2,645, increasing by $881 compared to a year ago.
Retail buyers are expected to spend about $49.8 billion on new cars, showing an increase by $6.0 billion from November of last year.
Total aggregate retailer profit project from this month from new vehicle sales is at $2.5 billion, which is down by 10.1% from November 2023.
“November’s results highlight strong sales performance, driven by rising inventory levels for certain brands and deeper discounts from both manufacturers and retailers. J.D. Power anticipates that consumers will spend nearly $50 billion on new vehicles this month, representing a 13.7% increase from a year ago and setting a new record for the month of November,” Thomas King, president of the data and analytics division at J.D. Power said in a statement.
“One of the drivers of higher incentive spending from a year ago is the increased availability of discounting of lease payments. This month, leasing is expected to account for 23% of retail sales, up from 22% in November 2023,” he added.
“Despite challenges such as stubbornly high interest rates and declining used vehicle values, the overall health of the new-vehicle market remains strong,” he added.
Jeff Schuster, the vice president of research, automotive at GlobalData also expressed his thoughts on the global sales forecast.
“There continues to be a level of risk with vehicle demand in the fourth quarter, but the increase in October has eased some of the concern,” he said.
For quite some time, U.S. automakers have been contending with Chinese automakers. In addition, President-elect Donald Trump has signified imposing tariffs, further threatening the auto industry, U.S. News reported.
American car buyers would be hit hard by President-elect Donald Trump’s plan to impose a 25% tariff on all goods coming from Mexico and Canada.
The top 10 car manufacturers built 1.4 million light vehicles in Mexico during the first six months of this year, with 90% sent to the U.S., Reuters reported, citing data from the Mexican Automotive Manufacturers Association.
In addition to fully manufactured vehicles, Mexico and Canada supply more than 50% of all of America’s imported auto parts, worth nearly $100 billion, which would increase the cost of building autos in the U.S.
