Industry Shows ‘Signs of Recovery’

By Staff Writer June 29, 2020 82
Thomas King is the President of the Data & Analytics division and Chief Product Officer at J.D. Power. Thomas King is the President of the Data & Analytics division and Chief Product Officer at J.D. Power.

New-vehicle retail sales in June are expected to be down from a year ago, according to a joint forecast developed jointly by J.D. Power and LMC Automotive. Retail sales are projected to reach 1,002,600 units, a 5.7 percent decrease compared with the J.D. Power pre-virus forecast and 11.3 percent decrease compared with June 2019. Reporting the same numbers without controlling for the number of selling days translates to a decrease of 14.7 percent over last year. (Note: June 2020 contains one less weekend and one less selling day than June 2019).

“The industry continues to show signs of recovery in June, with retail sales down only 6 percent compared with the J.D. Power pre-virus forecast,” said Thomas King, president of the data and analytics division at J.D. Power. “This represents a significant improvement from May when retail sales were off 20 percent from the pre-virus forecast. The combination of pent-up demand, states relaxing coronavirus-related restriction and elevated incentives are all providing a tailwind for the industry.”

Total sales in June are projected to reach 1,085,600 units, a 25.1 percent decrease compared with June 2019. Reporting the same numbers without controlling for the number of selling days translates to a decrease of 28.0 percent over last year. The seasonally adjusted annualized rate (SAAR) for total sales is expected to be 12.8 million units, down 4.4 million units from a year ago.

Remarkably, in markets like Detroit (one of the most severely affected areas by COVID-19), retail sales are on pace to exceed 2019 levels.

Record levels of manufacturer incentives for the month of June are supporting the sales recovery. Incentive spending is on pace to reach $4,411 in June, the highest ever for the month and an increase of $445 from June 2019. Incentives on cars are expected to be up $459 to $4,031, with trucks/SUVs up $407 to $4,524.

Transaction prices continue to set records and are on pace to rise by 3.9 percent to $34,981, the highest level ever for the month of June. Record prices are being supported by the ongoing shift in consumer demand from cars to trucks/SUVs. Car sales are on pace to account for just 24 percent of new-vehicle retail sales in June, the lowest level ever for the month of June and the third month in a row below 25 percent. As the industry shifts towards more expensive products, SUV mix is expected to reach a record 56 percent.

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Last modified on Monday, 29 June 2020 13:58

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