Consumers are purchasing fewer vehicles, but those in the market are expected to spend more money as the average price soars to record levels and is projected to reach $33,182 — up more than 4 per cent year-over-year, and the highest level ever for the month of July.
A recent retail sales forecast from J.D. Power and LMC Automotive reveals that new-vehicle retail sales in July are expected to decline YOY, reaching a projected 1,178,500 units (a 2 per cent decrease).
“July will be another month of modest sales declines — but with high vehicle expenditures — as the average new vehicle sales price exceeds $33,000, up over $1,400 from July 2018,” said Thomas King, Senior Vice President of the Data and Analytics Division at J.D. Power.
The total sales for the month of July are anticipated to reach 1,397,400 units, which represents a 1.8 per cent decrease compared with July 2018. The seasonally adjusted annualized rate (SAAR) for total sales is expected to be flat at 16.7 million units, compared to a year ago.
The increase in sales price is driven by two main factors: consumers paying more money for recently launched SUVs, and more attractive interest rates on new vehicles that allow car buyers to purchase more expensive vehicles while maintaining affordable monthly payments.
The sale of new SUVs has jumped significantly through mid-July, rising to an all-time high level and representing nearly 52 per cent of new-vehicle sales. New-vehicle launches in the mid-size SUV segment have helped boost sales, while sedans sits at around 28 per cent of industry retail sales for the third month in a row.
“Despite the continued slow-down in sales, consumers are expected to spend more than $2 billion more on new vehicles than last year,” said King. “This is a clear reflection that manufacturers are building the types of vehicles that shoppers want. Consumer expenditures in July of $39 billion represents the highest level for the month since 2017.”
