October New-Vehicle Sales Expected to Rise with 16.1M SAAR; Consumer Spending on Vehicles Up 11.8% Year Over Year

J.D. Power:

The Total Sales Forecast

Total new-vehicle sales for October 2024, including retail and non-retail transactions, are projected to reach 1,327,600, a 2.1% increase from October 2023 on a selling day adjusted basis, according to a joint forecast from J.D. Power and GlobalData. October 2024 has 27 selling days, 2 more than October 2023. Comparing the same sales volume without adjusting for the number of selling days translates to an increase of 10.3% from 2023.

The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 16.1 million units, up 0.6 million units from October 2023.

The Retail Sales Forecast

New-vehicle retail sales for October 2024 are expected to increase from a year ago. Retail sales of new vehicles are expected to reach 1,136,700, a 5.9% increase from October 2023 when adjusting for selling days. Comparing the same sales volume without adjusting for the number of selling days translates to an increase of 14.3% from 2023.

The Takeaways

Thomas King, president of the data and analytics division at J.D. Power:

“October results show a solid sales performance, with retail sales growing nearly 6% year over year and a projected total SAAR of 16.1 million. While transaction prices and interest rates continue to decline, monthly payments are up slightly, largely due to reduced trade-in equity driven by falling used-vehicle prices. Despite this, consumers are expected to spend approximately $48.3 billion on new vehicles this month, an increase of 11.8% compared with October 2023.

“Retail inventory is projected to be 1.9 million units, a 4% increase from September and a 25.1% increase from October 2023. Increasing inventory levels are driving deeper discounts from both manufacturers and retailers. However, the availability of inventory remains uneven across different brands and models, with certain high-volume vehicles still experiencing shortages.”

The average new-vehicle retail transaction price has fallen from a year ago due to higher manufacturer incentives, larger retailer discounts and increased availability of lower-priced vehicles. Transaction prices are trending towards $44,904—down $739 or 1.6%—from October 2023. The combination of higher retail sales and lower transaction prices means that buyers are on track to spend nearly $48.3 billion on new vehicles this month—11.8% higher than October 2023.

“Total retailer profit per unit—which includes vehicles gross plus finance and insurance income—is expected to be $2,245, down 27.3% from October 2023. Rising inventory is the primary factor behind the profit decline and fewer vehicles are selling above the manufacturer's suggested retail price (MSRP). Thus far, only 12.7% of new vehicles have been sold above MSRP, which is down from 27.1% in October 2023.”

Total aggregate retailer profit from new-vehicle sales for this month is projected to be $2.4 billion, down 17.4% from October 2023.

“Increased inventory means fewer vehicles are being pre-sold by retailers, with more shoppers able to buy directly off dealer lots. J.D. Power forecasts that 29.7% of vehicles will sell within 10 days of arriving at the dealership, down from a peak of 58% in March 2022. The average time a new vehicle remains in the dealer's possession before sale is expected to be 50 days, up from 20 days a year ago.”

Manufacturer discounts are continuing to rise. The average incentive spend per vehicle is expected to grow 70.5% from October 2023 and is on track to reach $3,149. Expressed as a percentage of MSRP, incentive spending is currently at 6.3%, an increase of 2.5 percentage points from a year ago. Spending increased by $24 per unit from September 2024.

“One of the drivers of higher incentive spending from a year ago is the increased availability of discounted lease payments. This month, leasing is expected to account for 23.2% of retail sales, up 2.3 percentage points from 20.8% in October 2023.

“Although appealing lease offers are boosting the lease mix, the industry is still grappling with the lasting effect of diminished leasing activity from three years ago. The number of leases set to expire this October is down 10.7% compared with September and 35.4% lower than in October 2023. With fewer leases maturing, there are less opportunities to drive sales.”

Average monthly finance payments this month are on pace to be $738, up $14 from October 2023. The average interest rate for new-vehicle loans is expected to be 6.7%, down 68 basis points from a year ago. Monthly payments increasing is a result of a drop in trade-in equity, even though transaction prices and interest rates are falling.

So far in October, average used-vehicle retail prices are $28,472, down $669 (-2.3%) from a year ago. The decline in used-vehicle values is translating to lower trade-in equity for owners, now trending towards $7,909, which is down $911 from a year ago.

“November traditionally marks the beginning of the holiday sales event season for the automotive industry. This period often sees a focus on premium vehicles, accompanied by manufacturer-backed lease incentives and pricing discounts. As the number of leases expiring in November and December is projected to be nearly 40% lower than the same period a year ago, this holiday season may require innovative strategies to entice customers into acquiring a new vehicle.”

Sales & SAAR Comparison

The Details

• The average new-vehicle retail transaction price in October is expected to reach $44,904, down $739 from October 2023. The high for any month—$47,329—was set in December 2022.
• Average incentive spending per unit in October is expected to reach $3,149, up $1,302 from October 2023. Spending as a percentage of the average MSRP is expected to increase to 6.3%, up 2.5 percentage points from October 2023.
• Average incentive spending per unit on trucks/SUVs in September is expected to be $3,338, up $1,385 from a year ago, while the average spending on cars is expected to be $2,309, up $901 from a year ago.
• Retail buyers are on pace to spend $48.3 billion on new vehicles, up $5.1 billion from October 2023.
• Trucks/SUVs are on pace to account for 78.3% of new-vehicle retail sales in October.
• Fleet sales are expected to total 190,872 units in October, down 15.6% from October 2023. Fleet volume is expected to account for 14.4% of total light-vehicle sales, down 3 percentage points from a year ago.
• Average interest rates for new-vehicle loans are expected to be 6.7%, down 68 basis points from a year ago.

EV Outlook

Elizabeth Krear, vice president, electric vehicle practice at J.D. Power:

“EV share of the retail market increased 0.8 percentage points in September, rising to 10.2%. The fourth quarter is when the industry will see the effect of new model year 2025 vehicles entering the market. EV model year transition is behind gas-powered models as only 5% of EVs have transitioned to model year 2025 vs. 37% for gas-powered models. A later model-year transition typically brings more incentives to clear out the older model year, which means OEMs risk having to spend more money to move the older inventory.

“EV Incentives as a percentage of MSRP are currently averaging 11.5%—up from 4.7% this time a year ago. In comparison, similar incentives for gas-powered vehicles are averaging almost 6%, up from 3.8% a year ago. Right now, 83% of EV inventory is model year 2024 and 42% of gas-powered inventory is of model year 2024.

“While typical changeover, incentives and inventory would imply the continued pricing actions to move older vehicles, the result of the upcoming election might also influence policy changes, consumer confidence and consideration of EVs.”

Global Sales Outlook

Jeff Schuster, vice president of research, automotive at GlobalData:

“The global light-vehicle selling rate for September was 89 million units, slightly lower than August but consistent with the past five months. September saw a 4.2% decrease year over year, marking the fourth consecutive month of negative performance compared with the same period in 2023. Year-to-date volume is now only 0.3% higher than in 2023, putting annual growth at risk as we move into the fourth quarter.

"Following the recent trend, Argentina, Brazil and Russia were the only markets showing positive growth in September. Argentina is benefiting from reform set by the new administration and, with expected interest-rate increases in Russia, some sales are likely being pulled forward. North America experienced a 10% decline with the absence of the Labor Day weekend making year-over-year comparisons challenging. Both China (-6%) and Western Europe (-4%) contributed to the overall decline in September.

“Year-over-year declines are anticipated to reverse in October, with volume projected to increase 4% and the selling rate expected to surpass 90 million units. Several markets are forecasted to post double-digit growth in October, led by Europe, North America, Argentina, Brazil, Japan and India. China is also expected to see significant gains.

“As global light-vehicle sales show signs of stabilizing, some of the acceleration previously expected in the fourth quarter has been tempered. The 2024 forecast now stands at 88.0 million units, down by 500,000 from the previous month, with revisions made for China, Western Europe and the United States. The increase from 2023 is now projected at 1.4% due to existing risk factors. Growth is still anticipated to pick up in 2025 as pricing moderates and economic risks are expected to diminish. The forecast for 2025 is 91.1 million units, representing a 3.5% increase from 2024.”

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