Early November U.S. Auto Sales Slip; Hope for Thanksgiving Surge
A strong Thanksgiving sales weekend primed with year-end incentives may prop up November’s total new-vehicle sales in the United States. However, a mid-month sales update from J.D. Power and auto forecasting partner LMC Automotive predicts a monthly sales dip from a year ago. Trucks remain stars, accounting for 62.7% of new-vehicle retail sales during the current month. So far in November, 50% of new-vehicle retail sales are 2017 models.
Based on data from the first 17 days of November, total (retail and fleet) new-vehicle deliveries in November are projected to decline 3.4% (adjusted for two extra selling days this year). Retail new-vehicle sales will likely dip 2% below last year to 1.13 million units. Fleet sales are expected to fall 9.3% on a sales-adjusted basis, and make up 18.3% of the sales mix vs. 19.5% a year ago.
The sales forecast update further states that this year’s presidential election disrupted sales slightly in the first half of the month, but the temporary dip has been offset by post-election sales gains. Additionally, Thanksgiving weekend sales are expected to bolster the month’s totals since it is typically one of the busiest selling periods of the year.
Auto companies are also not afraid to prime sales. Incentive spending in November is averaging $3,886 per unit, up 15% from November 2015, and the average new-vehicle retail transaction price in November is $31,645, a record for the month.
J.D. Power’s Deirdre Borrego, senior vice president and general manager of automotive data and analytics, said, “Although we are forecasting another decline in retail sales, in absolute terms, vehicle sales remain at near-record levels, while transaction prices are at record highs.” She cautioned that strong sales totals are being driven in part by higher incentive levels—a risk for the long-term health of the auto industry.
Jeff Schuster, senior vice president of forecasting at LMC Automotive, said that the level of uncertainty in the market is high, but noted that “financial markets have shrugged off adverse policy risk related to trade and immigration under President-elect Trump and are expecting a fiscal stimulus boost that could spill over to autos.”