New light-duty SAAR increased 11.4% year-over-year in April, according to the most recent National Automobile Dealers Association Market Beat.
The report noted April had 15.9 million units, compared to 14.3 million a year earlier. With more cars available for people and companies to buy, some of the built-up demand was finally relieved, pushing up sales. Wards Intelligence estimates 16% of April sales will be fleet sales.
NADA also reports an increasing number of new-vehicle incentives contributed to the April sales boost.
J.D. Power predicts April incentive spending per unit will be $1,599, which is a year-over-year jump. Average incentive spending has risen from its lowest levels, but not every OEM has seen the same raise. Some OEMs have been able to boost new-vehicle supply significantly, but others are still having an issue with vehicle production.
“Those OEMs with more supply will be better able to offer incentives, and some may even participate in Memorial Day discounting later this month,” NADA’s report said.
Interest rates and transaction prices are still high, pushing new-car payments even higher, NADA reported.
J.D. Power says the typical payment on a new-car loan in April will hit $729, a jump of $48 year-over-year. The biggest factor in the higher average payments is interest rate hikes. The interest rate on a new-vehicle finance contract should have hit 6.8% in April, up 227 points year-over-year. Interest rates will probably climb higher, NADA says, as the Fed is expected to increase rates at its meeting this week.
The NADA report predicts continued sales improvement driven by greater vehicle availability for the remainder of the year.
“Our forecast for 2023 is 14.6 million units,” NADA says.
The entire NADA report can be downloaded here.
Originally posted on Auto Dealer Today