December is shaping up to be a gift for car dealers to close out the year, according to the J.D. Power-LMC Automotive monthly U.S. Automotive Forecast, with sales and inventory on the upswing.

U.S. new-vehicle sales, retail and nonretail combined, are projected to rise 5.3% year-over-year to 1.3 million. That would put 2022 sales at 13.7 million, down 8.4% from 2021. Fourth-quarter sales are projected to reach 3.5 million, up 9.6% year-over-year.

The report predicts that retail sales alone will fall 2.8% year-over-year, while fourth-quarter retail sales should be up 1.3%. Full-year sales will be down 11.3%.

“Retail inventory in December is expected to finish its third consecutive month at more than one million units,” said J.D. Power Data and Analytics Division President Thomas King. “… however, there are still not enough vehicles produced to meet demand. Transaction prices will hit a record high for the month, even with shoppers becoming a bit more sensitive to retailer mark-up addendums over MSRP.”

King said that reduced markups are moving dealer profits off the record levels they reached during the Covid era, though per-unit profits are still nearly double prepandemic levels. The average December vehicle price will set a record of $46,382, up 2.5% year-over-year.

The report said consumers will spend a projected $48.2 billion on new cars in December, the third-highest spend ever for the month.

Meanwhile, used-car prices are falling slightly, the average trade-in equity for the month at about $9,316, down 3% year-over-year.

The report indicated that inventory levels will keep gradually rising next year, so, despite forecasted economic headwinds, two years of pent-up consumer demand should make for continued low inventories and strong sales.

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