Total retailer profit per unit with gross profit and finance & insurance income will reach a record ~$5,164, an increase of $3,060 Y-o-Y. This is the second consecutive month above $5,000.
In the face of the healthy Biden Administration economic recovery, new-vehicle retail sales for November 2021 are expected to decline when compared with November 2020, according to a joint forecast from J.D. Power and LMC Automotive. The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 13.6 million units, down 2.2 million units from 2020. Buyers are tracking to spend $41.1 billion on new vehicles this month, the highest on record for the month of November. (US October Light Vehicle Sales Drop -23% YoY)
Tight inventories are colliding with strong consumer demand that continues to maintain prices, and profit per unit sold, at record levels. Average transaction prices are expected to reach a November record of $44,043, a sixth consecutive month above $40,000, and 18.1% higher than November 2020 when prices were $37,284.
A big factor are record-low manufacturer incentives. The average manufacturer incentive per vehicle is at a November low of $1,612, a decrease of $2,089 from a year ago. Expressed as a percentage of the average vehicle MSRP, incentives for November 2021 are trending toward a record-tying low of 3.6%, down nearly five percentage points from a year ago and the second time on record below 4.0%.
Retail sales of new vehicles in November 2021 are expected to reach 933,700 units, a 12.6% decrease compared with November 2020 when adjusted for selling days. November 2021 has one more selling day than November 2020. Comparing the same sales volume without adjusting for the number of selling days translates to a decrease of 8.8% from 2020.
“Retail inventory on dealer lots is expected to end below one million vehicles for a fourth consecutive month, with sales in each month being dictated by the number of vehicles delivered to dealerships rather than reflecting actual demand,” said Thomas King, president of the data and analytics division at J.D. Power
“The lack of vehicles in inventory this month is particularly significant as the typical Black Friday sales surge will be difficult to support. Nevertheless, strong underlying demand for new vehicles, coupled with rising pent-up demand due to the inventory shortage, is sustaining record transaction prices and profits for each unit sold,” King noted.
Total retailer profit per unit with gross profit and finance & insurance income is on pace to reach a record $5,164, an increase of $3,060 from a year ago. This is the second consecutive month above $5,000.
“Grosses have been above $4,000 for five consecutive months. Despite the drop in sales volume, this record profit per unit sold will result in November 2021 being the most profitable month on record for retailers. Total aggregate retailer profit from new-vehicle sales is projected to be up 226% from November 2019, reaching $4.8 billion,” said King.
Record new-vehicle prices are being supported by strong used-vehicle prices, as new-vehicle buyers benefit from more equity on their trade-in vehicles. The average trade-in value for November is trending towards $9,549, an increase of $4,332 (83%) from a year ago and the first time above $9,000.
Furthermore, interest rates are beneficial compared with a year ago. The average interest rate for loans in November is expected to decrease 30 basis points to 4.01%. Even with lower interest rates and increased trade-in values, the average monthly finance payment is on pace to hit a record high of $670, up $74 from November 2020.
What’s next? How about an affordability crisis, which has haunted the industry in the past? Mystery of the moment: Why is it dealers tend to be Republicans? They were severely hurt by the last administration?
About Ken Zino
Ken Zino, editor and publisher of AutoInformed, is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn.
He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe.
Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped during a downshift and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap.
AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks.
Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.
US November Light Vehicle Sales Forecast Down Again
Total retailer profit per unit with gross profit and finance & insurance income will reach a record ~$5,164, an increase of $3,060 Y-o-Y. This is the second consecutive month above $5,000.
In the face of the healthy Biden Administration economic recovery, new-vehicle retail sales for November 2021 are expected to decline when compared with November 2020, according to a joint forecast from J.D. Power and LMC Automotive. The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 13.6 million units, down 2.2 million units from 2020. Buyers are tracking to spend $41.1 billion on new vehicles this month, the highest on record for the month of November. (US October Light Vehicle Sales Drop -23% YoY)
Tight inventories are colliding with strong consumer demand that continues to maintain prices, and profit per unit sold, at record levels. Average transaction prices are expected to reach a November record of $44,043, a sixth consecutive month above $40,000, and 18.1% higher than November 2020 when prices were $37,284.
A big factor are record-low manufacturer incentives. The average manufacturer incentive per vehicle is at a November low of $1,612, a decrease of $2,089 from a year ago. Expressed as a percentage of the average vehicle MSRP, incentives for November 2021 are trending toward a record-tying low of 3.6%, down nearly five percentage points from a year ago and the second time on record below 4.0%.
Retail sales of new vehicles in November 2021 are expected to reach 933,700 units, a 12.6% decrease compared with November 2020 when adjusted for selling days. November 2021 has one more selling day than November 2020. Comparing the same sales volume without adjusting for the number of selling days translates to a decrease of 8.8% from 2020.
“Retail inventory on dealer lots is expected to end below one million vehicles for a fourth consecutive month, with sales in each month being dictated by the number of vehicles delivered to dealerships rather than reflecting actual demand,” said Thomas King, president of the data and analytics division at J.D. Power
“The lack of vehicles in inventory this month is particularly significant as the typical Black Friday sales surge will be difficult to support. Nevertheless, strong underlying demand for new vehicles, coupled with rising pent-up demand due to the inventory shortage, is sustaining record transaction prices and profits for each unit sold,” King noted.
Total retailer profit per unit with gross profit and finance & insurance income is on pace to reach a record $5,164, an increase of $3,060 from a year ago. This is the second consecutive month above $5,000.
“Grosses have been above $4,000 for five consecutive months. Despite the drop in sales volume, this record profit per unit sold will result in November 2021 being the most profitable month on record for retailers. Total aggregate retailer profit from new-vehicle sales is projected to be up 226% from November 2019, reaching $4.8 billion,” said King.
Record new-vehicle prices are being supported by strong used-vehicle prices, as new-vehicle buyers benefit from more equity on their trade-in vehicles. The average trade-in value for November is trending towards $9,549, an increase of $4,332 (83%) from a year ago and the first time above $9,000.
Furthermore, interest rates are beneficial compared with a year ago. The average interest rate for loans in November is expected to decrease 30 basis points to 4.01%. Even with lower interest rates and increased trade-in values, the average monthly finance payment is on pace to hit a record high of $670, up $74 from November 2020.
What’s next? How about an affordability crisis, which has haunted the industry in the past? Mystery of the moment: Why is it dealers tend to be Republicans? They were severely hurt by the last administration?
About Ken Zino
Ken Zino, editor and publisher of AutoInformed, is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn. He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe. Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped during a downshift and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap. AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks. Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.