Cars and Drivers

New Car Sales Seen Down 2% in March: JD Power

Paul Ausick

Published: March 26, 2019 11:55 am

Last Updated: January 6, 2020 6:01 am

Now that neither General Motors nor Ford reports monthly sales figures, auto industry watchers have to wait for the quarterly sales reports to find out what’s actually happening with the U.S. industry’s biggest players. Little good news is expected.

Research firm J.D. Power and auto industry analytics firm LMC Automotive on Tuesday released their estimate of March new light vehicle sales. Total U.S. sales are projected at 1.56 million units, a drop of 2.1% compared with March of 2018. The seasonally adjusted annual rate (SAAR) is forecast at 16.9 million units, a decline of 400,000 units compared with last March. First-quarter sales are forecast at 3.95 million units, down 2.5% year over year.

The portion of total March sales coming from retail sales is forecast at 1.2 million, down 3.4% year over year. The SAAR for retail sales is 13 million units, down 400,000 compared to the SAAR at the end of March 2018. For the first time in six years, first-quarter retail sales are expected to drop below 3 million, coming in at 2.94 million units, a year-over-year decline of 4.9%.

Thomas King, senior vice president of the Data and Analytics Division at J.D. Power, said:

While the volume story could be better, there is remarkable growth in transaction prices, with records being set monthly. New-vehicle prices are on pace to reach $33,319 in Q1—the highest ever for the first quarter—and it’s more than $1,000 higher than last year.

J.D. Power and LMC Automotive estimate that sales of vehicles costing less than $25,000 will be down 12% year over year. Automakers also have exercised restraint in incentive spending, offering incentives averaging an estimated $3,821 per unit, a year-over-year drop of $119. Incentive spending on cars is down $333 per unit to $3,627 and spending on light trucks and sport utility vehicles is down $27 to $3,903.

The Federal Reserve’s decision to slow or stop raising interest rates will help keep new vehicles affordable, according to King, who added, “While the first quarter has exhibited more weakness than expected, there is still enough time to recover some of the lost volume.”

Sales volume needs to rise so that the industry does not have to reduce production or raise incentives in order to move inventory. Currently, dealer inventory turns over every 74 days, up five days from last year’s level at the same time.