Business

Supply constraints to slow U.S. auto sales growth in June – J.D. Power, LMC Automotive

Growth in U.S. new vehicle retail sales for June is expected to be lower than the previous month, despite strong consumer demand, as supply constraints and chip shortages have led to lean inventories, consultants J.D. Power and LMC Automotive said on Friday.

Retail sales for new vehicles in June are estimated to reach 1.1 million units, up 12.4% from last year, the companies said in a statement, lower than their expectations for 34% and 110% growth in May and April, respectively.

Total new-vehicle sales for June, including retail and non-retail, are projected to reach 1.3 million units, a 19.5% increase compared with the same period in 2020.

“The effect of fewer vehicles in inventory at dealerships is finally starting to have a material effect on aggregate industry sales volumes, as eager buyers struggle to find their desired new vehicle,” said Thomas King, president of data and analytics division at J.D. Power.

Average transaction prices are expected to rise 14.9% to $40,206, the highest on record, while the average incentive spending per unit is expected to fall to $2,492 from $4,349 last year.

“Consumers are buying more expensive vehicles despite smaller discounts, which is dramatically increasing the profitability of those sales for both manufacturers and retailers,” King added.

The total seasonally adjusted annualized rate for the month will be 15.8 million vehicles, up 2.6 million units from 2020 but 1.4 million units less than 2019.