Incentives Rise as Cars Sit on Dealers’ Lots

By Staff Writer May 28, 2019

New-vehicle retail sales are expected to fall in May from a year ago, according to a forecast developed jointly by J.D. Power and LMC Automotive.

Retail sales are projected to reach 1,226,800 units, a 3.1 percent decrease compared with May 2018. The seasonally adjusted annualized rate (SAAR) for retail sales is expected to be 13.5 million units, down nearly 200,000 from a year ago.

Sales have declined every month this year, with calendar year-to-date sales through May expected to be down 5.2 percent compared with the same period in 2018.
Total sales in May are projected to reach 1,558,800 units, a 2.1 percent decrease compared with May 2018. The seasonally adjusted annualized rate (SAAR) for total sales is expected to be 17 million units, down 200,000 from a year ago.

The number of new vehicles sitting on dealer lots is rising. On average, new vehicles sold in May spent 74 days on dealer lots, the highest level for the month of May since 2009.

Twenty-nine percent of vehicles sold so far in May have sat on lots for 90 days or longer, up from just over a quarter of vehicles last year.

Incentive spending per unit so far in May is $3,722, up $25 from last year. Spending as a percentage of MSRP remains below the 10 percent threshold at 9.1 percent.

Transaction prices are continuing to rise. New-vehicle prices in May are on pace to reach $33,457—the highest ever for the month—and are up more than 4 percent ($1,345) from last year. The record prices reflect higher prices for both cars (up 3 percent to $27,259) and trucks/SUVs (up 4 percent to $36,388).

The growth in average prices is due primarily to sales weakness at lower price points. Retail sales of vehicles under $30,000 are expected to be down 5.7 percent in May, compared with 2.1 percent for the market overall.



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Last modified on Saturday, 08 June 2019 18:30