It appears there will not be showers of new vehicles buyers in April after seeing good numbers through the first three months of the year. However, analysts suggest the market is still healthy.
New vehicle sales may fall slightly in April — or they may rise. It depends upon who you ask.
While new vehicle sales are expected to fall to kick off the second quarter, says Cox Automotive analysts, the drop — just 2.2% — the industry is still tracking for its best results since 2019.
Strong inventory combined with rising incentives continue to support new vehicle sales. At the beginning of April, the total supply of available new vehicles was up 46% compared to the year-ago period.
“Since April 2023, the new-vehicle SAAR has experienced some large swings, with an average sales pace in the mid-15 million level,” said Charlie Chesbrough, Cox Automotive senior economist.
“This month, more volatility in the market is also expected, although the sales pace is anticipated to rise slightly. Despite high interest rates and elevated vehicle prices, consumers remain resilient. Sales growth may be sluggish, but growth continues. And we expect these conditions to persist throughout the year.”
Or maybe not
New vehicle buyers have reasons to celebrate as average transaction prices continue to fall.
Not everyone agrees with this assessment as J.D. Power analysts believe April sales will be increase slightly compared to last April. Retail sales month-v-month will rise 2.1% and 3.2% from March, according to their forecasts, which will be enough to offset a drop in fleet sales.
“April is showing mixed results, with an increase in retail sales offset by a decline in sales to fleet buyers,” said Thomas King, president of the data and analytics division at J.D. Power. “This is a notable change from recent months in which manufacturers have increased fleet sales.
“Although sales to retail buyers are rising, the rate of growth is modest. This is due in part to discounts from manufacturers and retailers stabilizing, coupled with ongoing deterioration of used-vehicle values that results in shoppers having less trade-in equity.”
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Prices dropping
Although the prediction makers may not agree if automakers will sell more new cars, trucks and utility vehicles or less, they do agree that what buyers are paying for them continues to decline.
While April sales may drop, the overall market is on track for its best year since 2019.
“The average new-vehicle retail transaction price is declining as manufacturer incentives rise, retailer profit margins fall, and availability of lower-priced vehicles increases compared to a year ago,” King noted.
Overall, transaction prices for April look like they’ll come in at an average of $45,093, which is down $1,172, or 2.5%, from April 2023. As inventory levels continue to rise, so too do incentives. However, it’s not the only reason why they’re up.
“One of the drivers of higher incentive spending compared to a year ago is the increased availability of lease deals, and leasing is growing accordingly,” King said. “This month, leasing is expected to account for 23.6% of retail sales, up 3.7 percentage points from 19.8% in April 2023.”
After rising consistently during the past few years, average monthly loan payments are stabilizing. The average monthly finance payment this month is on pace to be $724, down $6 from April 2023. The average interest rate for new-vehicle loans is expected to be 7.0%, an increase of 20 basis points from a year ago.
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