Global Light Vehicle Sales

In July, the Global Light Vehicle (LV) selling rate approached 91 million units per year – the best sales results of 2024 thus far. While market volumes were down marginally year-over-year, the market is up slightly under 2% year-to-date.

The U.S. market posted another year-over-year decline, with sales dipping 1.5% to 1.29 million units, but the selling rate increased to 16 million units per year. In China, the domestic market maintained its solid pace. The July selling rate reached 27.7 million units per year, increasing 2% from June and bringing the year-to-date average selling rate to 24 million units per year. Regardless, year-over-year sales declined by 9% in July. Western Europe volume was flat year-over-year, while the Japanese market bounced back 11% month-over-month.

Strong monthly performance aside, the global outlook for 2024 was revised down by 200,000 units, with a new forecast of 88.7 million units – a 2.2% increase from 2023.

“Despite the adjustments, 2024 remains on track to be a strong year for auto sales, with anticipated rate cuts and pricing reductions creating a positive atmosphere for consumers,” says Jeff Schuster, vice president of automotive research at GlobalData.

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 July 2024, including retail and non-retail transactions, are projected to reach 1,340,500 – a 2.8% year-over-year increase, according to a joint forecast from J.D. Power and GlobalData. Industry professionals note July sales are inflated due to the recent CDK Global cyberattack.

“The July sales pace would be stronger were it not for a combination of factors that are affecting consumer demand. While discounts from dealers and OEMs grew in July from June, the increases were slightly smaller than is typical, since July is historically when manufacturers start to elevate discounts on prior model-year vehicles,” says Thomas King, president of the data and analytics division at J.D. Power.

“In addition, the industry is now dealing with the consequences of reduced leasing three years ago. Fewer leases three years ago mean that fewer lessees are returning to dealers to buy or lease a new vehicle today. The volume of leases expiring decreased 7.5% in July, following a 14.4% drop in June. With fewer lease customers returning to market, there are fewer opportunities for new lease sales,” he explains.

Data shows overall inventory is down 6.7% compared to the end of June. According to J.D. Power, the “temporary disruption in vehicle availability” is largely attributed to 2025 model-year transition. King expects retail inventory to hit 1.6 million units by month’s end – a decline compared to recent months, yet a considerable 32.5% year-over-year increase.

Important Takeaways, Courtesy of J.D. Power:

Retail buyers are on pace to spend $47.8 billion on new vehicles, up $1.4 billion year-over-year.
Trucks/SUVs are expected to account for 79.9% of new vehicle retail sales.
The average new vehicle retail transaction price is predicted to reach $44,271, down $1,166 year-over-year.
Average incentive spending per unit on trucks/SUVs is expected to be $3,016, up $1,069 from a year ago; meanwhile, the average spending on cars is expected to be $2,391, up $660 from a year ago.
Average interest rates for new-vehicle loans are estimated at 6.90%, down 15 basis points from a year ago.
Total retailer profit per unit, which includes vehicle gross plus finance and insurance income, is expected to be $2,298, down 33% year-over-year.
Fleet sales are on pace to total 205,212 units in July, down 8.1% year-over-year. Fleet volume is expected to account for 15.3% of total light-vehicle sales, down 1.8 percentage points from a year ago.

“This year, the Labor Day holiday weekend will fall within the August sales reporting period. The Labor Day weekend is one of the year’s largest selling weekends and typically falls within the September reporting period. August results this year are likely to be unusually strong and will skew typical year-over-year comparisons,” King says. “The key question is the extent to which manufacturers and dealers will attempt to leverage elevated shopping activity through aggressive discounts. Historically, the Labor Day weekend has been an excellent opportunity to find a great deal on a prior model-year vehicle.”

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) were higher in July compared to June. The Manheim Used Vehicle Value Index (MUVVI) rose to 201.6, a decline of 4.8% from a year ago.

“In late June, wholesale value declines slowed, and that trend continued throughout July as we saw values appreciate over the course of the month,” says Jeremy Robb, senior director of economic and industry insights at Cox Automotive. “The sales conversion rate has been higher for each week in July, and that translated to higher prices overall at the wholesale level for the month. We are just beginning to see lower lease maturities for the key 3-year-old segment, and that impact will be felt over the rest of this year and into 2025 and 2026. As supply tightens for this key segment for the used vehicle market, we expect to see variances from historical average depreciation rates.”

According to Manheim, all major market segments experienced seasonally-adjusted prices that were down year- over-year in July – though the pace of declines slowed in comparison to previous periods. The SUV, pickup, mid-size and compact car, as well as luxury segments declined 5.2%, 5.3%, 6%, 6.4% and 6.2%, respectively. Electric vehicles (EVs) were down 11% year-over-year, while the non-EV segment decreased 5% over the same period.

KPI – September 2024: State of Business

By Pat Curtin