The February sales rate remains limited by low inventory; Record prices and dealer profitability continue


retail sales forecast

New vehicle retail sales for February 2022 are expected to decline from February 2021, according to a joint forecast by JD Power and LMC Automotive. Retail sales of new vehicles this month are expected to reach 922,100 units, down 5.7% from February 2021. (Note: February 2022 has the same number of sales days as February 2021.)

Total sales forecast

Total new vehicle sales for February 2022, including retail and non-retail transactions, are expected to reach 1,057,300 units, down 11.1% from February 2021.

The seasonally adjusted annual rate (SAR) for total new vehicle sales is expected to be 14.1 million units, down 1.7 million units from 2021.

Takeaway meals

Thomas King, President of Data and Analytics at JD Power:

“With retail inventories on track to end a fourth consecutive month below 900,000 units and a ninth consecutive month below one million units, the new vehicle supply situation is not showing signs short-term improvement. As a result, sales in February are determined by the number of vehicles delivered to dealerships rather than actual consumer demand.”

New vehicle prices continue to hold record highs as average transaction prices are expected to reach a record high of $44,460 in February, an 18.5% increase from a year ago. Supply shortages continue to limit manufacturers’ incentive offers. For February, incentive spend per vehicle as a percentage of average vehicle MSRP is trending toward a record low of 2.8%, down 5.0 percentage points from February 2021 and the second consecutive month below 3 .0%. From an absolute value perspective, average manufacturer incentive spend per vehicle is on track to reach $1,246, down $2,143 from a year ago.

“Vehicles continue to sell quickly and an increasing number of these vehicles have been ordered by buyers. This month, nearly 53% of vehicles will be sold within 10 days of arriving at a dealership, while the average number of days a new vehicle is in a dealership’s possession before being sold is in goes from being 20 days, up from 54 days a year ago.

“Despite lower volumes, higher prices mean retail consumers are on track to spend $41.0 billion on new vehicles this month, the highest on record for February and 12 .4% above February 2021.

“Dealers also continue to benefit from strong transaction prices, with the retailer’s total profit per unit – including gross revenue and finance and insurance income – on track to reach $5,023, an increase of $2,837 $ vs. a year ago and the fifth consecutive month above $5,000 Profit per unit gains offset lower sales volume as retailers’ overall total profit from new vehicle sales is expected to increase by 117% compared to February 2021, reaching $4.6 billion.

“Record new vehicle prices are supported by exceptionally high used vehicle prices as new vehicle buyers enjoy more equity on their trade-in vehicles. The average trade value in February is trending toward $9,663, a 93.0% increase of $4,657 from a year ago. As expected, interest rates are starting to rise, but at a moderate level. The average loan interest rate in February is expected to rise three basis points from a year ago to 4.28%. The average monthly finance payment is on track to hit an all-time high of $668 for the month of February, up $71 from February 2021. This translates to an 11.9% increase in monthly payments per compared to a year ago, which is still less than the 18.5% increase. in transaction prices.

“What we see in February – with sales limited by available inventory – is likely to continue into March. The underlying question is which manufacturers will have the capacity to produce enough vehicles to increase inventory levels. The disruptions Continued supply chain disruptions, along with short-term announcements of production stoppages by several manufacturers, mean that the overall inventory situation is unlikely to change in March. For some manufacturers, the situation is likely to deteriorate. likely means pricing and profitability per unit for retailers and manufacturers will likely remain healthy.”

Comparison of sales and SAAR

New American Vehicle

February 20221, 2

January 2022

February 2021

Retail sales

922,118 units

(-5.2% less than in February 2022)2

876,186 units

977,520 units

Total sales

1,057,262 units

(-11.6% decrease February 2022)2

992,927 units

1,189,228 units

SARAR Retail

12.7 million units

13.9 million units

13.4 million units

Total SAAR

14.1 million units

15.1 million units

15.9 million units

1 Figures quoted for February 2022 are forecasts based on the first 17 days of sales of the month.

2 February 2022 has 24 days of sale, like February 2021.

The details

  • The average retail price for a new vehicle in February is expected to reach $44,460. The previous high for any month, $45,283, was set in December 2021.

  • Average incentive spend per unit in February is expected to reach $1,246, down from $3,388 in February 2021. Spend as a percentage of average MSRP is expected to fall to 2.8%, down 5.0 percentage points from February 2021.

  • Average incentive spending per unit for trucks/SUVs in February is expected to be $1,240, down $2,144 from a year ago, while average spending for cars is expected to be $1,267, down $2,137 from a year ago.

  • Buyers are poised to spend $41.0 billion on new vehicles, up $4.3 billion from February 2021.

  • Trucks/SUVs are on track to account for a record 78.8% of new vehicle retail sales in February.

  • Fleet sales are expected to total 135,100 units in February, down 36.2% from February 2021 on a day-of-sale adjusted basis. Fleet volume is expected to represent 13% of total light vehicle sales, compared to 18% a year ago.

Global Sales Outlook

Jeff Schuster, President, Americas Operations and Global Vehicle Forecasts, LMC Automotive:

“Global light vehicle sales got off to a better than expected start in 2022, as January recorded a volume of 6.6 million units, only 1% behind January 2021. The sales rate increased to 83.9 million units, compared to 82.1 million units in December 2021. Volume in China increased by 4.6% in January, which is consistent with recent months where China has outperformed most main markets. Some markets across Europe also saw marked improvement, including Germany and the UK. February is expected to end at 5.7 million units, down 1.8% from February 2021. The sales rate is expected to fall to 77.4 million units. The Russian invasion of Ukraine will negatively affect the end of the month and add another layer of substantial risk to the recovery in 2022.

“An already tight supply of vehicles and high prices around the world will come under additional pressure due to the severity and duration of the conflict in Ukraine. Rising oil and aluminum prices will likely affect consumers’ willingness and ability to buy vehicles, even if inventories improve. We have significantly downgraded the outlook for Ukraine and Russia due to the escalating conflict between the two and the repercussions associated with sanctions against Russia. The decline in Europe caused the outlook for global light vehicle sales to drop from 400,000 units to 85.8 million units. Volume is still expected to increase by 5% from 2021, but the short-term risk has been increased beyond the pandemic. »

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