The U.S. auto retail industry is gearing up for a busy Spring selling season as unsold new cars and trucks begin to pile up on dealer lots. This increase in supply has led to the return of discounts and incentives, according to Charlie Chesbrough, senior economist for Cox Automotive. In March, incentives helped boost U.S. auto sales, marking a gradual increase in discounting as the industry continues to recover from the impact of the pandemic and parts-supply issues.
Estimates for March sales are projected to be around 1.4 million to 1.5 million cars and trucks combined, showing a significant improvement compared to the previous year. A forecast by J.D. Power and GlobalData predicts March sales of about 1.5 million, up approximately 12% from the previous year. Another forecaster, S&P Global, expects March sales to be just below 1.5 million, representing a 7% increase from the previous year. This surge in sales is expected to continue into the first quarter of the year, indicating a positive trend in the auto retail industry.
With high interest rates and higher inventory levels, automakers and dealers are facing challenges related to affordability. The average new-vehicle retail transaction price in March is estimated at $44,186, marking a 3.9% decrease compared to the same period last year. Retail inventory is also on the rise, with an estimated 1.7 million units at the end of March, showing a 4.2% increase from the previous month and a 39.3% increase compared to March 2023. These trends indicate a need for vehicles to become more affordable in order to meet consumer demand.
As dealers and automakers address affordability concerns, the New York Auto Forum provided insights into the current state of the industry. Thomas King, president of the Data & Analytics Division and Chief Product Officer at J.D. Power, highlighted the need for more affordable vehicles during a presentation at the forum. The event, sponsored by the National Automobile Dealers Association, J.D. Power, and the Greater New York Automobile Dealers Association, coincided with the New York International Auto Show, which was open to the public from March 29 to April 7.
Overall, the U.S. auto retail industry is experiencing a positive sales outlook for the Spring season, driven by an increase in supply and discounts. With March sales expected to surpass previous year figures, forecasters are optimistic about the overall growth in the industry. However, challenges related to affordability and inventory levels remain a concern for automakers and dealers, prompting a need for more affordable options for consumers. The trends seen in March indicate a shift towards more normal inventories and increased sales activity, setting a positive tone for the auto retail industry moving forward.
