According to a recent report from industry consultants, new vehicle sales in the United States are anticipated to experience an increase in May. This growth can be attributed to strong demand for personal transportation and the improvement of inventories at dealerships. The report, conducted by J.D. Power and LMC Automotive, estimates that new-vehicle sales, encompassing both retail and non-retail transactions, will reach approximately 1.3 million units this month, representing a 15.6% increase compared to the same period last year.
As consumer spending on new vehicles is predicted to rise, the report reveals that individuals are expected to allocate around $46.9 billion towards new vehicle purchases in May. This figure reflects a significant 13% increase from the previous year. Thomas King, the president of J.D. Power’s data and analytics division, emphasized that despite challenges such as elevated interest rates and pricing, sales volume and transaction prices have shown remarkable resilience. This can be attributed to the combination of improved vehicle availability and pent-up demand.
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The report also highlights that retail inventories are projected to increase by 48% compared to last year. While this surge in inventory levels may seem positive, it could potentially impact dealers’ profit margins. Despite manufacturers offering incentives to attract customers, dealers might face challenges due to a decline in the number of vehicles sold at prices exceeding the manufacturer’s suggested retail price (MSRP), as mentioned by Thomas King.
In terms of global trends, the report indicates that light-vehicle sales worldwide are expected to grow by 12.8% compared to the previous year. This growth is in line with levels seen in major markets, except for Eastern Europe, where sales are anticipated to increase by nearly 20% despite the ongoing conflict in Ukraine.
Factors such as increased vehicle availability, pent-up demand, and strong consumer spending contribute to this positive outlook. However, dealerships might face challenges in maintaining profit margins due to the abundance of inventory and a decline in sales at prices above the MSRP. Globally, the light-vehicle sales market exhibits similar growth patterns, with Eastern Europe being an exception due to higher sales despite the regional conflict.
Source: Reuters
