New cars and trucks are starting to pile up a bit at dealerships, despite a slight increase in discounts, which is likely causing some consumers to wait and see, hoping for bigger discounts to come, analysts said.
At the same time, based on sales at the beginning of the month, forecasters expect U. S. auto sales in May to show a slight increase or remain flat from last year. Affordability is a major drawback, due to high interest rates and even higher prices.
Although transaction costs have to fall as the source has improved, the average monthly payment is still high as interest rates remain high.
In a joint forecast, J. D. Power and GlobalData said they expect combined sales of about 1. 4 million cars and trucks for the month of May. This represents an increase of 2. 9% compared to May 2023, based on the sales rate.
The average monthly payment for a new vehicle in May is forecast to be $727, just $3 less than a year ago. Meanwhile, the average transaction value is down $1,045, or 2. 3%, from a year ago.
Cox Automotive released a similar forecast for auto sales for May, which also stands at 1. 4 million. Based on the sales rate, Cox’s forecast is virtually flat from a year earlier, down 0. 4%.
This is a small increase in sales (if any) considering that the industry started in May with a stock of new vehicles of around 2. 8 million. That’s a 51% increase from a year earlier, according to Atlanta-based Cox Automotive.
J. D. Power and Global Data estimate that the average incentive consistent with a new vehicle in May is $2,640, up from $1,782 in May 2023, an increase of 48. 1%.
Incentives as a percentage of manufacturer-recommended average retail value are expected to be 5. 3% in May 2024, up from 3. 6% a year ago, they said.
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