When automakers release sales data for November later this week, the numbers will reflect a 5.6% increase over November 2021, although that increase isn’t coming from buyers finding great deals during the Black Friday sales.
With retails sales of new vehicles remaining flat, total new-vehicle sales for November 2022, non-retail transactions to commercial and rental fleet customers, are projected to reach 1,102,300 units, a 5.6% increase from November 2021, according estimates from J.D. Power and LMC Automotive.
Comparing the sales volume without adjusting for the number of selling days translates to an increase of 9.9% from 2021.
Rising trend in sales
Thomas King, president of the data and analytics division at J.D. Power, said, “November results demonstrate that vehicle production is continuing to improve, with available retail inventory exceeding 1 million units for a second consecutive month and a larger share of manufacturers’ production being allocated to fleet customers. The increased production is enabling a 9.9% increase in total vehicle sales (non-selling day adjusted) for the month of November.
“On the retail side, demand continues to exceed supply, as evidenced by continued strength in transaction prices, retailer profits, inventory turn rates and minimal manufacturer discounting. However, as inventories and interest rates rise, these metrics will show signs of either moderation or decline.”
Inventories and prices continue to climb
New-vehicle transaction prices continue to rise but at slower pace than earlier this year. The average price in November will set a record for the month of $45,872, an increase of 3.1% from a year ago.
The record transaction prices mean that buyers are on track to spend nearly $42.8 billion on new vehicles this month — the highest level ever for the month of November and a 7% increase from November 2021.
Dealerships are continuing to pre-sell a significant portion of their available inventory, but increased production means vehicles are spending slightly more days at dealerships. This month, 49% of vehicles will be sold within 10 days of arriving at a dealership, down from a high of 56.5% in March.
The average number of days a new vehicle is in a dealer’s possession before being sold is on pace to be 21 days — up from 18 days a year ago.
“Manufacturer discounts remain minimal,” King said. The average incentive spend per vehicle is tracking toward $1,009, a decrease of 35% from a year ago. Incentive spending per vehicle expressed as a percentage of the average vehicle MSRP is trending at 2.2%, down 1.3 percentage points from November 2021.
No money on the hood
King said one of the factors contributing to the low level of spending is the absence of discounts on vehicles that are leased. This month, leasing is accounting for just 17% of retail sales. In November 2019, leases accounted for 30% of all new-vehicle retail sales.
Cox Automotive reported new-vehicle inventory closed October at its highest level since May 2021, and prices stayed high, according to Cox Automotive’s analysis of Auto Available Inventory data.
During the past three months, all but four major brands have seen an increase in inventory. The question is: Will demand keep up with supply?
“The supply situation in the new vehicle market has significantly improved over recent months,” said Charlie Chesbrough, Cox Automotive senior economist. “But with interest rates rising, and consumer optimism falling, the key question now is whether buyers will be willing and able to buy.”
The total U.S. supply of available unsold new vehicles stood at 1.56 million units at the end of October, compared with a revised 1.32 million vehicles at the end of September. Days’ supply climbed to 49, the highest since May 2021, and compared with a revised 43 days’ supply at the end of September.
Supply at month end was 78% higher, or 680,000 units, than at the end of October 2021. Days’ supply was 70% higher than at the same time a year ago.