As the U.S. auto retail industry prepares for a busy Spring selling season, the main driving force behind this surge in activity is the increase in unsold new cars and trucks sitting on dealer lots. This has led to a resurgence in discounts and incentives, with industry experts noting that more supply has resulted in the return of these sales tactics. The auto industry has been slowly recovering from the effects of the pandemic, which initially caused a shortage of new vehicles and parts supply problems, leading to a decrease in inventory levels.
Incentives have played a key role in boosting U.S. auto sales in March, with forecasters predicting a modest increase in discounting as the industry continues to normalize its inventory levels. Estimates for March sales are expected to reach around 1.4 million to 1.5 million cars and trucks combined, a significant improvement over the previous year. Various industry forecasters, such as J.D. Power and S&P Global, are predicting sales increases of about 12% and 7%, respectively, compared to March 2023, indicating a positive trend for the first quarter of 2024.
With the increase in both supply and discounts, dealers and automakers are now focusing on making vehicles more affordable for consumers. The average new-vehicle retail transaction price in March is estimated to be $44,186, a decrease of 3.9% compared to the previous year. Additionally, retail inventory levels have risen to around 1.7 million units at the end of March, showing a 4.2% increase over February 2024 and a 39.3% increase over March 2023. Industry experts, including Thomas King from J.D. Power, recognize the need for vehicles to become more affordable in order to meet consumer demand and improve sales figures.
The trends in the auto industry are clear – affordability is a key factor in driving sales and increasing demand for new vehicles. High interest rates and higher inventory levels have put pressure on automakers and dealers to offer more competitive prices and incentives to attract buyers. The need for more affordable vehicles was highlighted by industry experts at the New York Auto Forum, sponsored by the National Automobile Dealers Association, J.D. Power, and the Greater New York Automobile Dealers Association. The forum, held in conjunction with the New York International Auto Show, aimed to address the challenges and opportunities facing the auto industry in the current market.
As the industry looks towards the future, it is crucial for automakers and dealers to focus on strategies that will make vehicles more accessible and affordable to consumers. With an increase in inventory levels and a return to more normal supply chains, the U.S. auto retail industry is poised for a successful Spring selling season. By offering competitive prices and incentives, dealers can attract more buyers and drive sales growth in the coming months. Overall, the industry is optimistic about the potential for increased sales and consumer demand as the market continues to recover from the challenges of the past year.
