April New-Vehicle Sales Expected to Decline Despite Rising Inventory

Retail sales were up, but fleet sales fell off.


New-vehicle sales should be a mixed bag when April closes, with total sales expected to decrease by 0.9% compared to last year despite a slight increase in retail sales. According to a joint forecast from J.D. Power and GlobalData, retail sales will have ticked up by 2.1% -- not enough to offset a decline in sales to fleet buyers.

Thomas King, president of the data and analytics division at J.D. Power, said 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," King said. "While the stabilization of discounting is positive for short-term industry profitability, the modest growth rate means that inventory at dealerships is continuing to rise and discounting is expected to increase. This should elevate the sales pace at the expense of per unit profitability.”

Retail inventory is expected to finish around 1.8 million units, a 3.2% increase from March 2024 and a 40% increase from April 2023. Fleet mix is projected at 16.8%, down 2.5 percentage points from April 2023 and down 13.6% on a selling-day adjusted volume basis.

“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 said. "Transaction prices are trending towards $45,093 -- down $1,172 or 2.5% -- from April 2023. The combination of slightly higher retail sales but lower transaction prices mean that consumers are on track to spend nearly $46.4 billion on new vehicles this month -- 3.5% lower than April 2023 and the fourth-highest April on record."

Amidst these price adjustments, total retailer profit per unit is projected to fall dramatically by 29.8% from April 2023, totaling $2.7 billion -- a 30.5% decline in total aggregate retailer profit from new-vehicle sales for the month. King added, "Rising inventory is the primary factor behind the profit decline and fewer vehicles are selling above the manufacturer's suggested retail price."

The shifting trends also affect how quickly vehicles are moving off lots. "This month, J.D. Power projects that 33.2% of vehicles will sell within 10 days of arriving at the dealership, down from a peak of 58% in March 2022," King explained. The average time a new vehicle remains in a dealer's possession before sale has extended to 44 days, up from 30 days last April.

The changing dynamics extend beyond sales figures and pricing to financing. The average interest rate for new-vehicle loans has risen to 7.0%, marking an increase from the previous year. Meanwhile, leasing has grown in popularity, now accounting for 23.6% of retail sales, up significantly from last year.

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