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Total US new-vehicle sales during October 2023 are forecast to reach 1,201,800, a 6.6% increase from October 2022, according to numbers just released by J.D. Power and GlobalData.* The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 15.5 million units, up 0.9 million units from October 2022. Retail buyers are on pace to spend $43.7 billion on new vehicles, up $0.3 billion from October 2022.
“October results indicate a relatively robust performance with modest year-over-year sales growth but with record consumer expenditures. Year-to-date total sales through October are anticipated to surpass 12.8 million units, reflecting a 13.6% increase compared with the same period a year ago. Nonetheless, these figures remain below pre-pandemic levels when year-to-date sales exceeded 14 million units. The UAW work stoppage, which commenced in September, has had a limited effect on October’s industry sales,” said Thomas King, president of the data and analytics division at J.D. Power.
According to the forecast higher pricing, combined with rising interest rates, are contributing to the escalation of monthly loan installments. The average monthly finance payment in October is tracking to be $728, up $11 from September 2022. This is a 1.5% increase in monthly payments from a year ago. The average interest rate for new-vehicle loans is expected to be 7.5%, an increase of 140 basis points from a year ago. Although, the month-to-month pace of rate increases are tempered when compared with the prior year.
“Used-vehicle prices have experienced a modest drop from the previous year but remain relatively close to their historical peak levels. The average trade-in equity for October is trending towards $8956, down $378 from a year ago. It’s worth noting that trade-in equity this month remains at double the amount of pre-pandemic levels, King said.
Other Observations, Opinions
- Sales to fleet customers are still high as manufacturers leverage higher vehicle production to allocate more vehicles to those fleet customers. Fleet sales are projected to increase 4.9% from October 2022.
- The increase in new-vehicle supply and higher interest rates are resulting in a dip in dealer profits, yet these profits continue to surpass pre-pandemic levels. The total retailer profit per unit—which includes grosses, finance and insurance income—is expected to reach $3,182 in October. While this is 28.9% lower than a year ago, it is still more than double the amount in October 2019. This month, only 25.7% of new vehicles are projected to be sold above MSRP, which is down from 41.3% in October 2022.”
- Total aggregate retailer profit from new-vehicle sales for this month is projected to be down 26% from October 2022, reaching $3 billion for the third-highest October on record.
- Retailers continue to pre-sell vehicles. However higher inventory levels enable more shoppers to buy directly from dealer lots. In October, 42% of vehicles are projected to be sold within 10 days of their arrival at the dealership, which is down from the peak of 57% in March 2022.
- Manufacturer discounts in October are expected to be relatively flat when compared with September but have increased materially from a year ago when incentives were at record lows. The average incentive spend per vehicle has grown 92.2% from October 2022 and is currently on track to reach $1,774. Expressed as a percentage of MSRP, incentive spending is currently trending at 3.7%, an increase of 1.7 percentage points from October 2022.
- Discounts on leased vehicles have risen in recent months. During October leasing is expected to account for 21% of retail sales, up significantly from 16% in October 2022, but well below October 2019 when leased vehicles made up nearly 30% of all new-vehicle retail sales.
- Elevated pricing, combined with rising interest rates, are contributing to the escalation of monthly loan installments. The average monthly finance payment in October is on pace to be $728, up $11 from September 2022. That translates to a 1.5% increase in monthly payments from a year ago. The average interest rate for new-vehicle loans is expected to be 7.5%, an increase of 140 basis points from a year ago. Although, the month-to-month pace of rate increases are tempered when compared with the prior year.
- Used-vehicle prices have declined slightly from the previous year but remain relatively close to their historical peak levels. The average trade-in equity for October is moving towards $8956, down $378 from a year ago. October trade-in equity remains at double the amount of pre-pandemic levels.
Global Sales Forecast
“While the global light-vehicle selling rate (SAAR) pulled back from the 100-million-unit rate in August, it did hit 93.2 million units, marking the fourth straight month above 90 million units. Global volume finished the month at 8.0 million units, up 9% year over year. North America led the major markets in growth, with volume up 21%. Growth in Europe remained solid at 15%, as recovery in Eastern Europe was solid at 31%, despite the continued war in Ukraine. Asia saw mixed results, with Japan growing 11%; China seeing stable growth of 7%; and South Korea contracting 4% as tighter credit and a weaking economy take hold,” said Jeff Schuster, group head and executive vice president, automotive at GlobalData.
“October is projected to continue the current pace of strong global sales, with a 91 million-unit selling rate. Volume is expected to be up 6% at 7.5 million units, with Europe expected to outperform other major markets.
“China and North America are still exceeding expectations, driving an upward revision to the 2023 forecast. Global light-vehicle sales are now expected to finish at 88.6 million units, up 9% from 2022. Thus far, there has been little effect to sales from the UAW strike but the longer it continues – and if it expands – there may be a more pronounced influence which could carry into early 2024. The outlook for 2024 has been increased slightly to 92 million units, a 4% increase from 2023, Volatility and risk remain elevated, given the number of variables that are currently affecting auto sales globally,” said Schuster.
*GlobalData says that “4000 of the world’s largest companies, including over 70% of FTSE 100 and 60% of Fortune 100 companies, make more timely and better business decisions thanks to GlobalData’s unique data, expert analysis and innovative solutions, all in one platform. GlobalData’s mission is to help our clients decode the future to be more successful and innovative across a range of industries, including the healthcare, consumer, retail, financial, technology and professional services sectors.” J.D. Power is also part of GlobalData. Inquiries at: customersuccess.automotive@globaldata.com.
Consumer Spending Spree – October US Auto Sales
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Total US new-vehicle sales during October 2023 are forecast to reach 1,201,800, a 6.6% increase from October 2022, according to numbers just released by J.D. Power and GlobalData.* The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 15.5 million units, up 0.9 million units from October 2022. Retail buyers are on pace to spend $43.7 billion on new vehicles, up $0.3 billion from October 2022.
“October results indicate a relatively robust performance with modest year-over-year sales growth but with record consumer expenditures. Year-to-date total sales through October are anticipated to surpass 12.8 million units, reflecting a 13.6% increase compared with the same period a year ago. Nonetheless, these figures remain below pre-pandemic levels when year-to-date sales exceeded 14 million units. The UAW work stoppage, which commenced in September, has had a limited effect on October’s industry sales,” said Thomas King, president of the data and analytics division at J.D. Power.
According to the forecast higher pricing, combined with rising interest rates, are contributing to the escalation of monthly loan installments. The average monthly finance payment in October is tracking to be $728, up $11 from September 2022. This is a 1.5% increase in monthly payments from a year ago. The average interest rate for new-vehicle loans is expected to be 7.5%, an increase of 140 basis points from a year ago. Although, the month-to-month pace of rate increases are tempered when compared with the prior year.
“Used-vehicle prices have experienced a modest drop from the previous year but remain relatively close to their historical peak levels. The average trade-in equity for October is trending towards $8956, down $378 from a year ago. It’s worth noting that trade-in equity this month remains at double the amount of pre-pandemic levels, King said.
Other Observations, Opinions
Global Sales Forecast
“While the global light-vehicle selling rate (SAAR) pulled back from the 100-million-unit rate in August, it did hit 93.2 million units, marking the fourth straight month above 90 million units. Global volume finished the month at 8.0 million units, up 9% year over year. North America led the major markets in growth, with volume up 21%. Growth in Europe remained solid at 15%, as recovery in Eastern Europe was solid at 31%, despite the continued war in Ukraine. Asia saw mixed results, with Japan growing 11%; China seeing stable growth of 7%; and South Korea contracting 4% as tighter credit and a weaking economy take hold,” said Jeff Schuster, group head and executive vice president, automotive at GlobalData.
“October is projected to continue the current pace of strong global sales, with a 91 million-unit selling rate. Volume is expected to be up 6% at 7.5 million units, with Europe expected to outperform other major markets.
“China and North America are still exceeding expectations, driving an upward revision to the 2023 forecast. Global light-vehicle sales are now expected to finish at 88.6 million units, up 9% from 2022. Thus far, there has been little effect to sales from the UAW strike but the longer it continues – and if it expands – there may be a more pronounced influence which could carry into early 2024. The outlook for 2024 has been increased slightly to 92 million units, a 4% increase from 2023, Volatility and risk remain elevated, given the number of variables that are currently affecting auto sales globally,” said Schuster.
*GlobalData says that “4000 of the world’s largest companies, including over 70% of FTSE 100 and 60% of Fortune 100 companies, make more timely and better business decisions thanks to GlobalData’s unique data, expert analysis and innovative solutions, all in one platform. GlobalData’s mission is to help our clients decode the future to be more successful and innovative across a range of industries, including the healthcare, consumer, retail, financial, technology and professional services sectors.” J.D. Power is also part of GlobalData. Inquiries at: customersuccess.automotive@globaldata.com.