Top News

LMC/J.D. Power: September Sales Expected to Fall Despite Record Incentives

September 27, 2016

DETROIT — For the fifth time in seven months, J.D. Power and LMC Automotive are predicting a year-over-year decline in new-vehicle retail sales. But officials with both firms said the numbers don't reflect significant weakness or risk, but they do see challenges ahead.

According to the forecast, U.S. new vehicle retail sales in Septemeber should be down 1.4% from a year ago, with the seasonally adjusted annual rate (SARR) for retail sales expected to fall from 15.2 million in the year-ago period to 14.9 million. The SAAR for total sales is projected to come in at 17.7 million units, down from 18 million in the year-ago period.

Retail sales are on pace to reach 1,185,500 units in September, while total sales are projected to fall 0.8% to 1,429,100, according to the forecast. Year to date through September, retail sales are expected to be down 1.3% compared to the same period in 2015.

Total sales are expected to show a slight 0.5% increase from a year ago, thanks in part to a rise in fleet sales in September. According to the forecast, fleet sales are expected to total 243,600, a 2.1% increase from the year-ago period. Fleet sales are expected to account for 14% of total light-vehicle sales.

“The U.S. automotive market continues to show signs of little growth, yet, in our opinion, the numbers do not reflect a significant weakness or risk,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “The expectation remains for steady volume levels at the topline, despite a pullback in the retail market and increased monthly performance volatility. However, group and brand performance is beginning to diverge as competitive pressure is at an all-time high.”

Labor Day weekend — typically one of the highest volume sales weekends in the year — slightly underperformed this year compared to last year. This holiday weekend yielded 199,493 units, a 1% year-over-year decline despite record-high incentives, the firms noted.

“The industry can be viewed through two competing perspectives. The first is that in absolute terms, the industry is performing at an exceptional level. While sales have fallen slightly, they are at near-record levels and transaction prices are at all-time highs,” said Deirdre Borrego, senior vice president and general manager of automotive data and analytics at J.D. Power. “The second is less positive. With the rate of growth slowing, leading indicators are pointing to challenges ahead. Specifically in September, incentive spending is at an all-time high.”

As Borrego noted, even though new-vehicle retail sales are expected to decline, new-vehicle retail transaction prices are still expected to rise. In September, according to the forecast, the average new-vehicle retail transaction price is expected to rise $192 from a year ago to $30,665. Additionally, trucks are expected to account for 60.8% of new-vehicle retail sales in September.

Comments

  1. 1. Joseph McKinney [ October 03, 2016 @ 10:37AM ]

    I read "Specifically in September, incentive spending is at an all-time high.”

    The details would make for excellent journalism, which is lacking in this industry. If incentives are at an all time high, why isn't that a story? I've been in the business since before the "rebate" was introduced. I do not see incentives near the all-time highs.

    What is the truth?

 

Your Comment

Please note that comments may be moderated. 
Leave this field empty:
Your Name:  
Your Email:  

CLOSE [X]

READ NEXT

Dataium Founder to Lead LotLinx's New Media Subsidiary

LotLinx Media Holdings, a new subsidiary of LotLinx, has named Eric Brown president, the company announced this week. The behavior data expert will focus on building up LotLinx's media properties and growing the business.