For the second consecutive year, the new vehicle retail sales pace in January is expected to fall from year-ago levels, according to a forecast developed jointly by J.D. Power and LMC Automotive. The seasonally adjusted annualized rate (SAAR) for retail sales is expected to be 13.7 million units, down 150,000 from a year ago. Retail sales are projected to reach 893,900 units, a 2.7% decrease on a selling day adjusted basis compared to January 2017. (Note: January 2018 has an extra selling day compared with January 2017).
“Coming off a strong sales period to close out 2017, a slower start to the year was anticipated,” said Thomas King, Senior Vice President of the Data and Analytics Division at J.D. Power. “After the industry’s emphasis on the sell-down of old model-year vehicles in December, January is a transition month as manufacturers shift focus towards 2018 model-year vehicles.”
Through mid-January, 2018 model-year vehicles accounted for 73% of retail sales, an increase of more than 11 percentage points from December. Average transaction prices so far in January have risen to $32,169, the highest level ever for the month of January. This means that while sales will fall on a selling-day adjusted basis, the total value of new vehicles purchased will increase by just over $1 billion from last year’s level.
“The challenge in 2018 will be maintaining incentive discipline, coming off a year when incentive spending per unit reached the highest level ever recorded,” King said. Average incentive spending through the first two weeks of January is $3,733, up $94 from the same period last year and on track to set a record high to start the year.
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