New vehicle sales in the United States for the third quarter are expected to be lower than a year before and lower than what was reported sold in the second quarter. Affordability remains an obstacle for many consumers.
General Motors and Stellantis — which makes Chrysler, Dodge, Jeep, Ram and Fiat brands — are expected to report their third-quarter U.S. sales results Tuesday. Ford Motor reports on Wednesday.
Edmunds.com, a car-shopping site, said that it predicts the industry will have sold 3,902,326 new vehicles in the third quarter, a 2.3% decrease compared with the third quarter of 2023 and a 4.7% decrease from last quarter. Edmunds' Head of Insights Jessica Caldwell pointed to continued high prices and interest rates as holding down sales.
"Part of the reason why prices are staying high is because inventory is hovering at levels where consumer demand is largely being met, and generous blanket incentives are being deemed unnecessary," Caldwell said. "Although this is an overall healthy place for the industry to be in compared to automakers’ pre-pandemic habits of overproduction and inventory glut, it unfortunately has also limited potential discounts or promotions for shoppers.”
Dealer profits are down
Cox Automotive also continues to see the auto industry new vehicle sales underperforming despite the Federal Reserve cutting interest rates by 50 basis points earlier this month.
For the quarter, new-vehicle sales volumes are forecast by Cox Automotive to be lower by 2.1% year-over-year and also lower compared with the second quarter this year. The experts at Cox blame sales declines at GM, Toyota and Stellantis for pulling the market down, Cox said in a statement Wednesday.
More: The Fed's bold move on interest rates has ripple effects, plus GM makes a bold move, too
September sales volumes will be lower because of a calendar quirk that saw the Labor Day holiday weekend fall into the August sales month. This boosted August’s sales but will diminish September’s sales versus a year ago, said Thomas King, president of the data and analytics division at J.D. Power.
"When August and September results are combined, retail sales increase 2.6% year over year," King said in a news media statement put out Thursday. "Retail inventory is projected to be 1.8 million units, a 6.2% increase from August and a 30.7% increase from September 2023. Rising inventories are leading to larger discounts from both manufacturers and retailers. However, the inventory situation continues to be inconsistent across brands and models, with some popular vehicles remaining in short supply.”
King said the average new-vehicle retail transaction price is "trending towards $44,467 — down $1,296 or 2.8% — from September 2023. The combination of lower retail sales and lower transaction prices means that buyers are on track to spend nearly $40.4 billion on new vehicles this month — 16.8% lower than September 2023."
J.D. Power estimates that total dealership profit per vehicle — which includes vehicles' gross plus finance and insurance income — is expected to be $2,294, down 29% from September 2023.
This automaker will be a winner
Charlie Chesbrough, senior economist at Cox Automotive, noted in the published report that new-vehicle sales incentives have been increasing throughout the year, supporting sales. August incentives estimated by Kelley Blue Book, were at the highest level since the first half of 2021.
As the Detroit Free Press reported earlier this month , in early August, new-vehicle inventory across the nation was more than 40% higher than the year-ago period, giving consumers more choices and more buying power with notably higher incentive levels. For August, the industry average incentive was 7.2% of the average transaction price up from 7% in July, according to Kelley Blue Book.
While incentive growth has slowed since earlier this year, Cox experts have noted brands such as Audi, Infiniti, Volkswagen, Nissan, Mitsubishi, Mini, Lincoln, Jaguar and others are offering incentives in excess of 10% of the average transaction price.
Some new-vehicle transaction prices have come under pressure, Chesbrough said, helping improve new-vehicle affordability to lift September’s sales volume compared with August. But there is sales uncertainty going forward.
"With the election season fully upon us, more volatility seems likely through the end of the year," Chesbrough said in a statement. "However, the recent interest rate cut will help household finances, and automakers are being more aggressive with discounts, so we remain optimistic that new-vehicle sales could improve marginally through the final quarter of 2024.”
Both Edmunds and Cox predict GM and Stellantis will report results that are lower than the year-ago period. Both expect Ford to report gains. Cox noted Honda Motor appears especially poised to report solid results.
“Honda is expected to see even more growth this quarter, thanks to another strong quarter of CRV and Accord sales," Chesbrough said. "So far this year, Honda has gained nearly 1% market share and has moved up into the top five in U.S. sales among the major automakers, knocking Stellantis down to No. 6.”
Fed rate cut is no guarantee to drive car sales
The Fed’s decision to cut rates at the end of September was a positive step, but it is no guarantee it will lead to a major uptick in sales through the rest of the year, Caldwell said.
But the good news is if there is another rate cut during the November Federal Reserve meeting, that, combined with the end of the model year and calendar year vehicles, could lead to more car shopping deals later this year, Caldwell said.
“But there are a few other uncertainties on the horizon that could also threaten auto sales through the rest of the year, such as potential disruptions from an East Coast port strike and consumer sentiment surrounding the outcome of the presidential election," Caldwell said.
ILA union and U.S. Maritime Alliance are at impasse over pay, so a threat of an Oct. 1 strike looms large. A strike could cause many supply chain disruptions and reignite inflation, according to Reuters .
Edmunds predicts GM will report new vehicle sales in the quarter of 652,457, a 3.3% decline compared with the year-ago period and a 1% loss of market share. For Stellantis, the forecast is 342,110 new vehicles sold in the quarter and a 10.5% decline and an 8.4% slide in market share. But for Ford, the forecast is 506,208 new vehicles sold, a 1.1% increase and a 3.5% gain in market share compared with a year before.
Cox predicts GM will report U.S. sales of 648,043 new vehicles, a 3.2% decline compared with the year-ago quarter. It forecasts Stellantis reporting sales of 301,293 new vehicles, a 20.8% plummet from its third-quarter results last year. It predicts Ford will report new vehicle sales of 509,310, a gain of 2.5% from the year-ago period.
Cox said most industry gains are coming from fleet sales and leases noting, "Fleet sales year-to-date in 2024 are tracking higher by about 7% year-over-year, while leasing is higher by 24%, thanks in large part to strong electric vehicle (EV) and plug-in hybrid lease offers."
Contact Jamie L. LaReau : jlareau@freepress.com . Follow her on Twitter @ jlareauan . Read more on General Motors and sign up for our autos newsletter . Become a subscriber .
This article originally appeared on Detroit Free Press: 3rd-quarter new vehicles sales could be rough for 2 Detroit automakers
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