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June New Car Sales Continue to Soften Despite Peak Perks

June New Car Sales Continue to Soften Despite Peak Perks

By Philly Murtha, June 27, 2017

Record incentive levels and sturdy demand for pickups and SUVs have not pumped up sluggish new-vehicle sales thus far in June. Consumers and corporate and rental fleets are expected to purchase or lease some 34,000 fewer new vehicles in June 2017 than a year ago, according to a monthly update from J.D. Power and auto forecasting partner LMC Automotive.

The June auto sales update, which is based on new-vehicle transaction data collected during the first 15 days of the month, predicts total (retail and fleet) deliveries will slip 2.3% to about 1.48 million units vs. 1.51 million units in June of last year. According to the update, retail deliveries will dip 1.3% from a year ago to 1.17 million units and fleet deliveries are set to fall 5.3% below last June and account for a lower 21% share of the sales mix. Both months have the same number of selling days—26.

Auto Sales

The first 6 months of 2017 may turn in the weakest first-half sales performance in three years, according to Deirdre Borrego, senior vice president of automotive data and analytics at J.D. Power, who said that the incentive spend per new vehicle through June is up $470 from a year ago and averaged $3,770—exceeding 10% of the average MSRP. Trucks continue to dominate the market and account for 63.7% of the retail new-vehicle sales mix. In related June sales news, the average retail new-vehicle sales price set another record of $31,720, up from the June 2016 high of $31,073.

In commenting on the sales slowdown, Jeff Schuster, senior vice president of forecasting at LMC Automotive, said that there has been a marked pullback in fleet volume along with a small contraction for retail new-vehicle sales, which are primed with incentives. Looking ahead, Schuster said, “It will be challenging in the second half of the year to keep pace with 2016, so some additional weakness and further risk are expected in both fleet and retail volume, but the year is still expected to reach 17 million units, which is certainly not a poor performance.”

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