Global Light Vehicle Sales

In June, the Global Light Vehicle (LV) selling rate registered 89 million units per year. It was not only a welcome improvement compared to last month, but also the best result of the year thus far. To date, 7.6 million vehicles were sold. While data shows a 2.2% decline year-over-year, year-to-date sales are up 2.3%. According to GlobalData, Chinese sales accelerated, while American units lagged behind as a result of a cyberattack affecting dealerships. The European selling rate increased, but Japanese sales struggled due to supply issues and a subdued macroeconomic climate.

“The slight pullback in demand expectations has trimmed the outlook for 2024 by 200,000 units to 88.9 million units, a 2.5% increase from 2023,” says Jeff Schuster, vice president of research and automotive at GlobalData. “China’s trade-in subsidy does not appear to be providing a boost to demand as the government expected. However, the European Central Bank did cut rates in June, and more are expected, which could provide some upside if sales are reignited. Overall, risks remain balanced, and the global auto market is stable.”

Caption: Market Lines is now excluding exports from the China sales total. The adjustment has been backdated to 2018.

U.S. New Vehicle Sales

Total new vehicle sales for June 2024, including retail and non-retail transactions, are projected to reach between 1,336,800 and 1,273,600 units – a 2.6% to 7.2% year-over-year decrease, according to a joint forecast from J.D. Power and GlobalData.

Industry professionals say June sales will not be reflective of actual consumer demand for new vehicles due to the recent CDK Global cyberattack.

“While considerable uncertainty exists around when these systems will return to normal – under the assumption that they return to normal by month end for most dealers – June total sales are projected to be between 1.33 and 1.27 million units – a 2.6% to 7.2% decrease, respectively, from June 2023,” says Thomas King, president of the data and analytics division at J.D. Power.

He notes a significant range of sales outcomes are possible due to the uncertainty surrounding both the system outage and the countermeasures dealers put in place to transact sales during the incident.

Important Takeaways, Courtesy of J.D. Power:

Retail buyers are on pace to spend $44.6 billion on new vehicles, down $3.1 billion year-over-year.
Trucks/SUVs are expected to account for 81.3% of new vehicle retail sales in June.
The average new vehicle retail transaction price is expected to reach $44,857, down $1,372 year-over-year.
Average incentive spending per unit is predicted to reach $2,625, up $889 year-over-year.
The average interest rate for new-vehicle loans is expected to be 6.99%, flat compared to a year ago.
Total retailer profit per unit, which includes vehicle gross plus finance and insurance income, is expected to be $2,407, down 32.3% year-over-year.
Fleet sales are expected to total 263,770 units in June, down 3.1% year-over-year. Fleet volume is expected to account for 20.2% of total light-vehicle sales, up 0.4 percentage points from a year ago.

“Prior to the disruption, the total sales forecast was tracking at 1.41 million units, so the effect of the disruption is significant. However, it will not affect overall demand in the long term. Sales will be delayed, but the majority will likely occur in July shortly after the situation is rectified and sales are being made despite system outages,” King explains. “Indeed, if there is one thing that the pandemic demonstrated to the auto industry, it’s that dealers are very adept at dealing with adversity and have been effective in rapidly identifying ways to deliver vehicles to buyers.”

Review a comprehensive 2024 forecast, courtesy of Cox Automotive.

U.S. Used Market

Wholesale used-vehicle prices (on a mix-, mileage- and seasonally-adjusted basis) increased 1.8% from June during the first 15 days of July. The mid-month Manheim Used Vehicle Value Index increased to 199.7, down 5.7% from the full month of July 2023.

“As we ended June, weekly depreciation trends at Manheim slowed markedly, and that has continued through the first half of July,” says Jeremy Robb, senior director of economic and industry insights at Cox Automotive. “Sales conversion has been increasing and is much higher than the last several years at this time, as more dealers are shopping for wholesale units to satisfy consumer demand for used vehicles, right when lease maturities are starting to decline.”

According to Manheim, all major market segments posted seasonally-adjusted prices that remained lower year-over-year in the first half of July. Compared to the industry’s year-over-year decline of 5.7%, the SUV and pickup segments declined 6% and 6.1%, respectively. Meanwhile, mid-size, compact and luxury cars depreciated at a greater rate of 6.6%, 7% and 7.7% year-over-year, respectively. Electric vehicles (EVs) were down 12.1% year-over-year, while the non-EV segment decreased 5.8% over the same period.

Conversely, Manheim says several major segments recorded larger price increases compared to June’s index performance. The overall industry rose by 1.8% compared to the prior month. However, compact and mid-size cars were up 2.7% and 3.1%, respectively. Both the SUV and pickup segments increased by 1.8%, while the luxury segment was flat over the same period. Compared to June, non-EVs increased 2.4% in the first half of July, while EVs were up 1.5%.

KPI – July 2024: State of Business

By Pat Curtin