Total U.S. new-vehicle sales for December 2022, including retail and non-retail transactions, are projected to reach 1,254,700 units, a 5.3% increase from December 2021, according to a joint forecast from J.D. Power and LMC Automotive. The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 13.2 million units, down 0.7 million units from 2021.
“Retail inventory in December is expected to finish its third consecutive month at more than one million units,” said Thomas King, president of the data and analytics division at J.D. Power. “With the improving inventory levels, December total sales volume will be up from a year ago, however there are still not enough vehicles produced to meet demand. The reduction in mark-ups is pushing dealer profits off their record high levels, however, per-unit profitably is still nearly double pre-pandemic levels.”
The record transaction prices means that buyers are on track to spend nearly $48.2 billion on new vehicles this month—the third highest level ever for the month of December and a slight 0.3% decrease from December 2021.
“While the inventory situation has improved modestly in the fourth quarter, supply remains well below the level at which consumer demand for new vehicles can be met,” said King. “New-vehicle transaction prices continue to rise—albeit at a slower pace than earlier this year. The average price in December will set a record of $46,382, an increase of 2.5% from a year ago.”
Total aggregate retailer profit from new-vehicle sales for the month of December is projected to be down 22.0% from December 2021, reaching $4.3 billion for the second-best December on record.
“Dealerships are continuing to pre-sell a good portion of their available inventory allocation, but increased production means vehicles are spending slightly more time at dealerships. This month, 47 per cent of vehicles will be sold within 10 days of arriving at a dealership, down from a high of 57 per cent in March. The average number of days a new vehicle is in a dealer’s possession before being sold is on pace to be 23 days—up from 18 days a year ago.
Used-vehicle prices are falling modestly which is resulting in less trade-in equity for new vehicle buyers. December 2022 trade equity is still more than double the pre-pandemic level helping consumers that have a vehicle to trade in offset some of the pricing and interest rate increases.
“Looking at 2023, retail sales will continue to be dictated by the number of vehicles shipped to dealerships,” said King. “Indications are that shipments will rise incrementally throughout the year, allowing sales to increase from 2022 levels. However, even with the probability of an economic downturn, pent-up consumer demand from the past two years will keep inventory levels relatively low. Therefore, 2023 is likely to be another year of relative healthy pricing and profitability.”
