Friday, 24 June 2022 12:10

New-Vehicle Transaction Prices Hit All-Time High Despite Rising Interest Rates


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New-vehicle retail sales for June 2022 are expected to decline when compared with June 2021, according to a joint forecast from J.D. Power and LMC Automotive.

Retail sales of new vehicles this month are expected to reach 965,300 units, an 18.2% decrease compared with June 2021 when adjusted for selling days.


June 2022 has one additional selling day compared to June 2021. Comparing the same sales volume without adjusting for the number of selling days translates to a decrease of 15.0% from 2021.


“The 2022 theme we have seen of sales quality over sales quantity is continuing in June," said Thomas King, president of the data and analytics division at J.D. Power.


New-vehicle prices continue to set records in June, King said, with the average transaction price expected to reach $45,844---a 14.5% increase from a year ago and the highest level on record.


"Consequently, even though the sales pace is down 18.2% year over year, consumers will spend $44.3 billion on new vehicles this month, the second-highest level ever for the month of June but slightly down 2.7% from June 2021 due to reduced volume," King said.


Total retailer profit per unit---inclusive of grosses and finance and insurance income---is on pace to reach a monthly record of $5,123, an increase of $1,174 from a year ago, King said. Eight of the past nine months have seen retailer profit per unit at or above $5,000.


"This elevated per-unit profit level is more than offsetting the drop in sales volume as total aggregate retailer profits from new-vehicle sales for the month of June is projected to be up 10.3% from June 2021, reaching $4.9 billion, the best June ever and the fourth-highest amount of any month on record," he said.


Due to the ongoing inventory constraints, discounts from manufacturers continue to erode. The average incentive spend per vehicle is tracking toward $930, a decrease of 59.4% from a year ago and the second consecutive month under $1,000.


Incentive spending per vehicle expressed as a percentage of the average vehicle MSRP is trending toward a record...

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