New-Vehicle Sales Fall From Spike
Forecast shows tariff rush fading, but price effects anticipated later this year.
Even with price normalization, consumers are set to spend about $54 billion on new vehicles this month, up 7% year-over-year and a record for May.
Pexels/Skylar Kang
The tariff sales rush appears to have slowed this month as federal trade policy waxes and wanes and significant price pops have yet to emerge.
J.D. Power’s May U.S. new-vehicle sales forecast projects retail deliveries to grow 1% year-over-year to 1.2 million units as adjusted for one extra selling day than last May.
As the spring bounce wanes from the highs brought by consumers getting ahead of any tariff-pumped prices, the average May transaction price will climb by a projected $649 year-over-year to $45,462, or 91% of manufacturer’s suggested retail price, J.D. Power forecast. That ATP is down 1% month-over-month.
Dealer profits appear to also be normalizing, J.D. Power said. Retailer profit per unit is forecast to fall $29 month-over-month to $2,502. That’s up $98 year-over-year, or aggregate retailer profit of $3 billion, a 10% bump.
Even with the price normalization, consumers are set to spend about $54 billion on new vehicles this month, up 7% year-over-year and a record for May, said J.D. Power. It predicted the average monthly loan payment will grow 3% to $748, also a record for May, despite a flat average interest rate.
The balance of the year is expected to get complicated. J.D. Power forecast tariff-induced inflation to automakers’ cost to make the average vehicle at $4,275, though it pointed out the effects will vary among brands and even within a single brand’s lineup.
“Some pricing actions are anticipated to occur in June and July, but it is likely that it will be year-end before go-forward pricing fully materializes,” said Thomas King, president of the company’s data and analytics division.
Originally posted on F&I and Showroom
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