U.S. new vehicle sales ramp up as year winds down

Consumer spending is forecasted to reach its highest level ever for Nov. (4 min. read)

Author

Anna del Villar
November 27, 2024

Analysts are anticipating a spike in new car sales for the month of Nov. due to greater discounts fueling buyer demand.

By the numbers: 

  • According to forecasts by Cox Auto and J.D. Power-GlobalData, the SAAR or seasonally adjusted annual rate (the pace of total sales on an annual basis) is 16 million - 16.5 million, higher than a year ago when the SAAR was 15.3 million - 15.5 million.

  • Total new vehicle sales for this month are projected to reach 1.32 - 1.36 million a 6.6% -  6.7% increase year-over-year.

Key drivers: New vehicle inventory hit over 3 million units in early Nov., per Cox Auto — the highest since the pandemic and up 677,000 units from last year. With days’ supply climbing to 85, sales incentives have followed suit, reaching 7.7% of the average transaction price — the most since April 2021.

“One of the drivers of higher incentive spending from a year ago is the increased availability of discounting of lease payments. This month, leasing is expected to account for 23% of retail sales, up from 22% in November 2023,” said Thomas King, president, data and analytics division at J.D. Power.

Follow the money: The combination of higher sales and ever so slightly more affordable cars means car buyers are on pace to spend $49.8 billion on new vehicles, up $6 billion year-over-year, reports J.D. Power. 

“With the U.S. election now in the rearview mirror, we may see vehicle sales finish the year in a strong position. With less uncertainty in the market, consumer confidence is moving higher, which will likely increase consumer willingness to buy a new vehicle,” said Charlie Chesbrough, senior economist at Cox Auto.

  • According to the University of Michigan, consumer sentiment is trending in a positive upward direction and is currently 17.1% higher than it was a year ago.

The elephant in the room: Incentives have heavily subsidized the sales of new and used electric vehicles (EVs). But with an expiration date on federal EV tax credits – the short and long-term views of the EV market look startlingly different.

  • Short-term: EV sales are expected to surge in Nov. and Dec.

“There is concern that federal tax credits for EVs and PHEVs may be reduced or eliminated when the new administration takes office. As a result, EV sales may experience some tailwinds, leading to robust activity through the end of the year,” said Chesbrough.

  • 64% of premium EV buyers and 49% of mass-market EV buyers say such credits and incentives is a top reason for purchasing their EV.

“Federal incentives were always supposed to be temporary. How long ‘temporary’ is, is the key point here,” said Elizabeth Krear, vice president, electric vehicle practice at J.D. Power.

  • Long-term: According to a Bloomberg report, experts from UC Berkeley and Duke University expect as much as a 27% drop in EV sales once the Biden-era EV tax credits are officially repealed.

Big picture: It’s a tale of two markets. On one hand, all signs point to auto retailers ending 2024 on a high note thanks to higher incentives and better deals for consumers, especially for EVs. But on the other, manufacturers could offset more aggressive incentives and affordability gains by keeping MSRPs high or raise them ever further under the looming threat of new tariffs.

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