In a positive sign for radio’s largest ad category, new-vehicle retail sales for the month of December are expected to be up from a year ago, according to a joint forecast from J.D. Power and LMC Automotive. The two groups say retail sales for new vehicles are projected to reach 1,400,300 units, a 1.0% increase compared with a year ago when adjusted for selling days. December 2020 contains three more selling days and one more selling weekend than December 2019. Comparing the same sales volume without adjusting for the number of selling days translates to an increase of 13.1% year over year, according to the forecast.
While increases are forecast for December, new-vehicle retail sales for the 2020 calendar year are projected to reach 12,386,000 a 9.5% decrease from 2019.
The total new-vehicle sales for the month of December – including retail and non-retail transactions – are projected to reach 1,619,000 units, a 5.1% decrease from December 2019 when adjusted for selling days. Without accounting for the difference in the number of selling days it translates to an increase of 6.3% from December 2019.
The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 16.4 million units, down 500,000 units from 2019. New-vehicle total sales for 2020 are projected to reach 14,468,200, a 14.8% decrease from 2019.
“December’s performance closes the year on multiple positive notes. Retail sales are up, transaction prices are at record levels and retailer profits are at all-time highs,” Thomas King, President of the data and analytics division at J.D. Power said in a release. “This reinforces that manufacturers and retailers are succeeding in getting vehicles built, shipped and sold in alignment with resilient consumer demand.”
J.D. Powers says the average number of days a new vehicle sits on a dealer lot before being sold is on pace to fall to 49 days, remaining below the 50-day threshold for the third consecutive month.
“Strong retail sales, combined with record transaction prices and low manufacturer discounts, is good news for manufacturer profitability,” King continued.
The average incentive from manufacturers in December on new vehicles is on pace to be $4,014 per vehicle, a decrease of $585 from a year ago. Expressed as a percentage of the average vehicle MSRP, incentives will be at 9.2%, down two percentage points from a year ago, and the fifth consecutive month below 10%. Incentive spending per unit is 19% lower than when it peaked at $4,953 per unit in April 2020. Total grosses per vehicle sale, inclusive of finance and insurance income, are on pace to reach $2,053, an increase of $813 from a year ago. This marks the sixth consecutive month above $2,000.
Average transaction prices are expected reach another all-time high, rising to $38,077, a 9% increase from a year ago. This is the first time that average prices have exceeded $38,000—just one month after prices exceeded $37,000 for the first time in November 2020.
Despite strong demand in the second half of 2020, the massive sales disruption brought on by the pandemic will be apparent when manufacturers announce their full-year results. Total Sales in 2020 are forecasted to be down 14.8% from 2019 and retail is forecasted to be down 9.5%. Despite lower sales, higher transaction prices will enable the total value of new vehicles purchased by consumers to be down just 4% at $442 billion.