New vehicle sales in the US are expected to rise 12.1% in March due to strong demand and vehicle availability, as per a joint report by industry consultants JD Power and GlobalData. Though demand for personal vehicles has remained constant, inventory levels have been rising as supply chain issues faced by automakers have begin normalising.
Apart from these, intense competition has led manufacturers and dealers to offer bigger discounts, marking a shift to a pre-pandemic trend of higher volumes and lower margins. For March 2024, total new-vehicle sales, including retail and non-retail transactions, are expected to reach 1,525,700 units, a 12.1% jump from a year ago. Average transaction prices are trending toward USD 44,186, down 3.6% from March 2023, while average incentive spend per vehicle has grown 66.6% from a year ago and on track to reach USD 2,800.
Total retailer profit per unit is expected to decline by around 32% in the month. Thomas King, president of the data and analytics division at JD Power, told Reuters, “While the sales and expenditure performance are impressive, it is coming at the expense of reduced retailer and manufacturer profitability as inventories of unsold vehicles rise and competitive pressures intensify.” Kind added, “The bias is shifting from low sales volumes, high prices and profits to higher sales volumes, lower prices.”
In a separate development, the Biden administration said that scaling back of new climate regulations meant to force emissions cuts from cars and power plants will have a negligible impact on its overarching goal to halve greenhouse gas pollution this decade. This would, however, depend on whether the US succeeds in its parallel strategy – to use lucrative taxpayer subsidies to fuel a massive deployment of solar, wind and other renewable energy installations. Biden hopes the latter route will ultimately power America’s fleet of electric vehicles, along with its homes and businesses, according to researchers.