New-vehicle retail sales for July 2022 are expected to decline when compared with July 2021, according to a joint forecast from J.D. Power and LMC Automotive. Retail sales of new vehicles this month are expected to reach 988,400 units, a 10.8% decrease compared with July 2021 when adjusted for selling days. July 2022 has one less selling day compared with July 2021. Comparing the same sales volume without adjusting for the number of selling days translates to a decrease of 14.1% from 2021.
The Total Sales Forecast
Total new-vehicle sales for July 2022, including retail and non-retail transactions, are projected to reach 1,159,700 units, a 5.7% decrease from July 2021. Comparing the sales volume without adjusting for the number of selling days translates to a decrease of 9.2% from 2021.
The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 13.7 million units, down 0.9 million units from 2021.
The Takeaways
“July is yet another month where supply constraints keep vehicle sales artificially low but deliver record transaction prices and dealer profitability,” said Thomas King, president of the data and analytics division at J.D. Power. “July 2022 is on track to be the ninth consecutive month that retail inventory closes below 900,000 units as anticipated improvements in vehicle production volumes fail to materialize. The industry sales pace is simply a function of the number of vehicles being delivered to dealers each month, with a large portion of those vehicles being sold before they arrive at the dealership. This month, 55% of vehicles will be sold within 10 days of arriving at a dealership, while the average number of days a new vehicle is in a dealer’s possession before being sold is on pace to be 19 days—down from 29 days a year ago.
“For July, new-vehicle prices continue to hover near record levels, with the average transaction price expected to reach $45,869—a 12.3% increase from a year ago—the second highest on record. Consequently, even though the sales pace is down 10.8% year over year, consumers will still spend nearly $45.3 billion on new vehicles this month, the second-highest level ever for the month of July but slightly down 3.5% from July 2021 due to the reduced sales volume,” he noted.
“In August, the overall industry sales pace will continue to be constrained by procurement, production and distribution challenges,” said King. “Consumer demand remains markedly higher than supply, all of which points to a continuation of the current marketplace dynamics of depressed sales volumes but record pricing and profitability. Longer term, the inevitable increase in production levels, coupled with higher interest rates and weakening economic conditions will likely lead to a rebalancing of the current volume/price dynamic. That said, the significant levels of pent-up demand for new vehicles mean the industry is generally well positioned to continue delivering strong financial results, despite the fact economic conditions and rising interest rates will cause some potential buyers to defer new-vehicle purchases.”
