New-vehicle retail sales for July 2022 are expected to decline when compared with July 2021, according to a joint forecast released today from J.D. Power and LMC Automotive. Retail sales of new vehicles this month are expected to reach 988,400 units, a 10.8% decrease compared with July 2021 when adjusted for selling days. July 2022 has one less selling day compared with July 2021. Comparing the same sales volume without adjusting for the number of selling days translates to a decrease of 14.1% from 2021.
Total new-vehicle sales for July 2022, including retail and non-retail transactions, are projected to reach 1,159,700 units, a 5.7% decrease from July 2021. Comparing the sales volume without adjusting for the number of selling days translates to a decrease of 9.2% from 2021. The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 13.7 million units, down 0.9 million units from 2021.
“July is yet another month where supply constraints keep vehicle sales artificially low but deliver record transaction prices and dealer profitability. July 2022 is on track to be the ninth consecutive month that retail inventory closes below 900,000 units as anticipated improvements in vehicle production volumes fail to materialize. The industry sales pace is simply a function of the number of vehicles being delivered to dealers each month, with a large portion of those vehicles being sold before they arrive at the dealership. This month, 55% of vehicles will be sold within 10 days of arriving at a dealership, while the average number of days a new vehicle is in a dealer’s possession before being sold is on pace to be 19 days—down from 29 days a year ago,” said Thomas King, president of the data and analytics division at J.D. Power.
“For July, new-vehicle prices continue to hover near record levels, with the average transaction price expected to reach $45,869—a 12.3% increase from a year ago -the second highest on record,” King said.
Executive Summary
- The average new-vehicle retail transaction price in July is expected to reach $45,869. The previous high for any month—$45,988—was set in June 2022.
- Average incentive spending per unit in July is expected to reach $894, down from $1,975 in July 2021. Spending as a percentage of the average MSRP is expected to fall to a record low of 1.9%, down 2.7 percentage points from July 2021.
- Average incentive spending per unit on trucks/SUVs in July is expected to be $900, down $1,017 from a year ago, while the average spending on cars is expected to be $871, down $1,295 from a year ago.
- Buyers are on pace to spend $45.3 billion on new vehicles, down $1.7 billion from July 2021.
- Truck/SUVs are on pace to account for 79.3% of new-vehicle retail sales in July.
- Fleet sales are expected to total 171,300 units in July, up 40% from July 2021 on a selling day adjusted basis. Fleet volume is expected to account for 15% of total light-vehicle sales, up from 10% a year ago.
- Average interest rates for new vehicle loans are expected to increase 104 basis points from a year ago to 5.31% in July 2021.
“ALG forecasts that new 2022 model-year vehicles will retain 82% of MSRP in calendar year 2023, which is a staggering 18 percentage points higher than the five years prior to the pandemic. This is due not only to the rise in new- and used-vehicle prices, but also to the drop in used supply associated with daily rental fleet units. By calendar year 2027, much of these gains will subside as pent-up demand is satisfied and new and used vehicle inventories rise, leading to declines in overall used market values,” said Eric Lyman, vice president, ALG.
Global Light Vehicle Sales
“The sales pace in China is expected to remain strong in July, with a selling rate of 29 million units and volume up 5% from July 2021. However, we don’t expect that to be enough to overcome weakness elsewhere. Global light-vehicle volume is expected to be down 2.5%, but the selling rate should remain above 80 million units to 83 million.
“For 2022, global sales have been trimmed slightly from last month. Global sales volume is now expected at 80.8 million units, down 0.8% from 2021 and a cut of 800,000 units from last month. China sales have been increased since last month, but we have cut North America and Europe further. While there is near-term upside potential in China, we believe volume will cool as inventory becomes tight, given strength of demand. That risk combined with further downside in Europe and North America, keeps risk elevated for the remainder of 2022 and into 2023,” said Jeff Schuster, president, Americas operations and global vehicle forecasts, LMC Automotive.
US July Sales Forecast Down. Prices, Profits Still Records
New-vehicle retail sales for July 2022 are expected to decline when compared with July 2021, according to a joint forecast released today from J.D. Power and LMC Automotive. Retail sales of new vehicles this month are expected to reach 988,400 units, a 10.8% decrease compared with July 2021 when adjusted for selling days. July 2022 has one less selling day compared with July 2021. Comparing the same sales volume without adjusting for the number of selling days translates to a decrease of 14.1% from 2021.
Total new-vehicle sales for July 2022, including retail and non-retail transactions, are projected to reach 1,159,700 units, a 5.7% decrease from July 2021. Comparing the sales volume without adjusting for the number of selling days translates to a decrease of 9.2% from 2021. The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 13.7 million units, down 0.9 million units from 2021.
“For July, new-vehicle prices continue to hover near record levels, with the average transaction price expected to reach $45,869—a 12.3% increase from a year ago -the second highest on record,” King said.
Executive Summary
“ALG forecasts that new 2022 model-year vehicles will retain 82% of MSRP in calendar year 2023, which is a staggering 18 percentage points higher than the five years prior to the pandemic. This is due not only to the rise in new- and used-vehicle prices, but also to the drop in used supply associated with daily rental fleet units. By calendar year 2027, much of these gains will subside as pent-up demand is satisfied and new and used vehicle inventories rise, leading to declines in overall used market values,” said Eric Lyman, vice president, ALG.
Global Light Vehicle Sales
“The sales pace in China is expected to remain strong in July, with a selling rate of 29 million units and volume up 5% from July 2021. However, we don’t expect that to be enough to overcome weakness elsewhere. Global light-vehicle volume is expected to be down 2.5%, but the selling rate should remain above 80 million units to 83 million.
“For 2022, global sales have been trimmed slightly from last month. Global sales volume is now expected at 80.8 million units, down 0.8% from 2021 and a cut of 800,000 units from last month. China sales have been increased since last month, but we have cut North America and Europe further. While there is near-term upside potential in China, we believe volume will cool as inventory becomes tight, given strength of demand. That risk combined with further downside in Europe and North America, keeps risk elevated for the remainder of 2022 and into 2023,” said Jeff Schuster, president, Americas operations and global vehicle forecasts, LMC Automotive.