New vehicle sales are expected to reach a record high for April this year, according to a recent forecast published by J.D. Power.
The auto industry research firm predicts retail vehicle sales will hit 1,325,500 units in April, a 110.6 percent increase compared with April 2020, and a 20.8 percent increase compared with April 2019. Total new vehicle sales for April 2021, meanwhile, which includes retail and non-retail fleet transactions, are projected to reach 1,479,800 units, a 107.1% increase from April 2020 and a 7.8% increase from April 2019.
Researchers at Cox Automotive are similarly bullish with their retail sales forecast for this month, predicting new vehicle sales to come in at around 1.36 million units.
These strong sales results come despite the lingering COVID-19 pandemic and the semiconductor chip shortage, which have led to tight inventories at dealerships nationwide. While inventory remains a problem for most automakers, the smaller supply and increased demand has negated the need for automakers to offer steep incentives on vehicles and driven consumers to pay closer to MSRP than in years prior.
“While falling numbers of vehicles in inventory at retailers is the primary risk to sales results in the coming months, to date, low inventories have not had a material effect on aggregate sales results,” said J.D. Power’s president of data and analytics, Thomas King. “Instead, they have enabled manufacturers and retailers to reduce discounts and consumers are demonstrating a willingness not only to buy vehicles closer to MSRP, but also to buy more expensive vehicles.”
Cox Automotive sees a similar sentiment. While new vehicle inventories continue to affect the industry, a resurgent U.S. economy driven by the vaccine rollout will likely result in sustained strong vehicle sales in the coming months.
“There is little reason to expect buyer interest to wane anytime soon given recent economic growth rate expectations and improvements to consumer sentiment,” said Charlie Chesbrough, a senior economist at Cox Automotive. “But inventory is a huge problem in the vehicle market – a lingering result of the COVID-19 shock last year.”
With automakers offering fewer sales incentives, average transaction prices are also going up. According to J.D. Power, the average transaction price in April is expected to rise 6.8 percent year-over-year to $37,572 – the second highest all time on record behind December 2020. Average transaction prices were significantly lower just five years ago, Cox Automotive points out, sitting at $31,240 for April 2016.
“Consumers will spend $49.8 billion on new vehicles this month, the highest ever for April and the third-highest consumer expenditure month on record,” J.D. Power said.
The used vehicle market is seeing a similar rebound as the COVID-19 pandemic wanes. With less new vehicle inventory sitting on dealer lots, more consumers are turning to the used market – resulting in smaller used vehicle inventories and thus higher prices.