U.S. new-vehicle retail sales in March are expected to reach 1.25-million units, a 2.4-percent increase compared with March 2016, while total light-vehicle sales are expected to reach 1,620,300 units, a 1.6-percent increase. March will be only the second month in the last 13 in which the retail market has grown by more than 2 percent.
“The sales growth in March will enable 2017 to move slightly ahead of 2016 on a year-to-date basis,” said Deirdre Borrego, senior vice president of automotive data and analytics at J.D. Power. “However, the competitiveness of the industry continues to be evident in ever-rising incentive levels. Incentives will reach a new high for the month of March and will exceed the 10-percent of MSRP threshold for the ninth consecutive month.”
According to J.D. Power and LMC Automotive:
• The average new-vehicle retail transaction price to date in March is $31,074, a record for the month, and surpassing the previous high of $31,049 set in March 2016.
• Average incentive spending per unit through March 12 is $3,768, a record for the month, and surpassing the previous high of $3,609 set in March 2009. Incentives as a percentage of MSRP are 10.4 percent, exceeding the 10-percent level in March for the first time since 2009. Then, it reached 11.3 percent as the industry was navigating the financial collapse of 2008/2009.
• With record transaction prices for the month and slightly higher retail sales volumes, consumers are on pace to spend $38.7 billion on new vehicles in March, about $1 billion more than last year’s level and a record for the month.
• Trucks account for 61.5 percent of new-vehicle retail sales so far in March—the highest level ever for the month of March—making it the ninth consecutive month over 60 percent. However, truck sales mix is down slightly from December’s all-time record level of 64.4 percent.
• Days to turn, the average number of days a new vehicle sit on a dealer lot before being sold to a retail customer, reached 70 in the first 19 days of March—the highest level for any month since July 2009.
• Fleet sales are expected to total 374,600 units in March, down 1.2 percent from March 2016. Fleet volume is expected to account for 23.1 percent of total light-vehicle sales, a slight decline from 23.8 percent in March 2016.
“As the first quarter comes to a close, light-vehicle demand in the United States remains stable and is expected to average 17.4-million units year-to-date,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “The President’s policy direction is taking center stage as potential positive and negative drivers of auto sales over the next 18 months. A border tax could have massive negative implications with more than 2-million units of new-vehicle demand at risk if imported vehicles and parts are taxed at 20%. Such a tax would increase the average price of all vehicles by 11% and could set off a trade war pulling the country into a recession.”
Despite the policy uncertainty, LMC is maintaining its forecast of total light-vehicle sales in 2017 at 17.6 million units, an increase of 0.2 percent from 2016. The forecast for retail light-vehicle sales is now expected to round up to 14.2 million units from 14.1 million units in 2016.