New-vehicle sales are expected to improve in February compared to January, but year-over-year performance is anticipated to drop, according to a new report from J.D. Power.
The details: The forecast, in partnership with GlobalData, projects that retail and non-retail transactions will hit 1,183,000, a 3.8% decrease year-over-year, with the seasonally adjusted annualized rate (SAAR) for total new-vehicle sales expected to be 15.6 million units.
Retail new-vehicle sales are expected to reach 931,400 units in February, a 4.6% decrease from a year ago.
The seasonally adjusted annualized rate (SAAR) for retail sales is projected to hit 12.6 million units, down 0.6 million units from last year.
EVs are expected to account for just 6.6% of retail sales, down 1.8% from a year ago.
Hybrid electric vehicles (HEV) are expected to account for 13.5% of new-vehicle retail sales, up 0.1%.
What they’re saying: “The February sales pace shows a modest improvement over January, but will be down from a year ago, with retail sales projected to decline 4.6%… As in January, performance is being shaped by depressed electric vehicle (EV) retail demand… while elevated transaction prices continue to weigh on volumes through ongoing affordability pressure,” said Thomas King, president of OEM solutions at JD Power.
Why it matters: For dealers, the mix shift toward hybrids (and away from EVs) changes how they stock, price, and present inventory. It also affects incentive strategies. Softer EV demand can mean more targeted programs, while stronger hybrid demand can keep discounts tighter and turn time faster in the right trims.
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Between the lines: Affordability will continue to be a pressure point in February, with average retail transaction prices expected to rise for EVs and non-EVs.
Average retail transaction prices are expected to increase 2.7% to $46,303 from a year ago, with non-EV prices rising 3.0% to $46,097 and EV prices ticking up 2.6% to $46,528.
Average manufacturer incentives are projected to hit $3,293 per vehicle in February, up $63 year over year, while EV discounts are expected to average $10,356, down $1,664 from last year.
Discounts on non-EVs are projected at $3,085, an increase of $346 from last year, and amount to 6.0% in February as a percentage of MSRP, up 0.6% from a year ago.
What they’re saying: “Affordability pressure remains significant, with the average monthly finance payment reaching $811, up $32 from a year ago. In response, more consumers are turning to 84-month loan terms, which are expected to account for 12.7% of financed sales this month compared to 7.7% a year ago,” said Thomas King, president of OEM solutions at JD Power, per the press statement.
Also worth noting: The average time a new vehicle remains in the dealer's possession before sale is expected to be 59 days in February, up from 58 days a year ago, with 26.0% of vehicles projected to be sold in less than 10 days, down 4.3% points from a year ago.
Bottom line: Dealers that align inventory to what moves fastest, stay disciplined on pricing, and build deals around payment (including term, rate, and trade strategy) will be best positioned as competitive intensity rises into spring.
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