Despite prices for new and used cars slowly decreasing, high interest rates remain a concern for consumers. However, the supply of new and used cars is increasing, leading to bigger discounts from auto manufacturers and dealers. Forecasters predict a slight decrease in U.S auto sales in April 2024 compared to the previous year, with sales expected to reach 1.3 million units.
Retail demand for new vehicles is actually expected to increase by 2.1% compared to the previous year, with sales to fleets declining. With inventory at dealerships on the rise and discounting expected to increase, the average new-vehicle retail transaction price in April is estimated at $45,093, down 2.5% from the previous year. Cox Automotive also predicts a total of 1.3 million U.S. auto sales for April, including retail and fleet.
Retail new-car inventory is expected to reach around 1.8 million units, a 3.2% increase from March 2024 and a 40% increase from April 2023. With higher discounts comes higher inventory, causing dealers to sell as quickly as possible to avoid additional interest costs from floorplan loans. The industry is still recovering from the new-product shortage that occurred during the early part of the pandemic, where high demand led customers to pay above sticker price for new vehicles.
Based on sales in the first part of April, only 16% of new vehicles were sold above Manufacturer’s Suggested Retail Price, a significant decrease from the previous year. While the industry is moving towards a more balanced market, with prices slowly decreasing and supply increasing, high interest rates continue to be a concern for consumers. Overall, the outlook for U.S auto sales remains positive, with retail demand expected to drive sales in the coming months.
