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Retail Ride Still Bumpy, but Good News Is Ahead
J.D. Power says the overall health of the new-car market remains strong.
2 Min Read
Once again, deep discounts cut into profits.Getty Images
Thomas King, president, data and analytics division at J.D. Power, predicts a mixed forecast for dealers heading into the new year.
New data from J.D. Power and GlobalData shows total new-vehicle sales for November 2024, including retail and non-retail transactions, are projected to reach 1,361,200, a 6.7% increase from November 2023 on a selling-day-adjusted basis.
“November’s results highlight strong sales performance, driven by rising inventory levels for certain brands and deeper discounts from both manufacturers and retailers,” King says. “J.D. Power anticipates that consumers will spend nearly $50 billion on new vehicles this month, representing a 13.7% increase from a year ago and setting a new record for the month of November.”
The downside? As retail inventory is projected to hit 2.1 million units – a 5.4% increase from October 2023 and a 29.7% increase from November 2023 – some manufacturers and dealers are offering deeper discounts that cut into profits.
Transaction prices are trending toward an average of $45,471 – down $150, or 0.3% – from November 2023.
King reports total retailer profit per unit – which includes the vehicle’s gross plus finance and insurance income – is expected to be $2,276, down 21.2% from November 2023. Other data from J.D. Power’s recent analysis include:
Manufacturer discounts continue increasing. The average incentive spend per vehicle is expected to grow 42.3% from November 2023 and is on track to reach $3,291. Expressed as a percentage of MSRP, incentive spending is currently at 6.5%, up 1.8 percentage points from a year ago. Spending increased by $174 per unit from October 2024.
The number of leases set to expire in November was down 14% compared with October and 35.9% lower than in November 2023. With fewer leases maturing, there are fewer opportunities to drive sales.
Monthly finance payments for November were on pace to average $745, up $20 from November 2023. The increases are due in large part to a drop in trade-in equity.
The average interest rate for new-vehicle loans is expected to be 6.45%, down 71 basis points from a year ago.
At the end of November, the average used-vehicle retail prices were $28,621, down $294 (-1.0%) from a year ago. The decline in used-vehicle values translates to lower trade-in equity for owners, now trending toward $8,043, down $540 from a year ago.
So, is a 2025 slump inevitable? Not at all, says King.
“As the year draws to a close, the positive trends observed in November are expected to persist. Despite challenges such as stubbornly high interest rates and declining used-vehicle values, the overall health of the new-vehicle market remains strong,” he says. “Although profit per unit is decreasing, higher sales volumes and enhanced leasing activity reflect resilient consumer demand. These trends position the industry for a solid finish to the year while continuing to adapt to evolving market dynamics.”
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