In December, Automakers Sell Cars, Trucks As Fast As They Can Build ‘Em

A larger supply of new cars and trucks enables a U.S auto sales increase of just over 5% in December, vs. December 2021, according to a forecast from J.D. Power and LMC Automotive.

Separately, Cox Automotive on Dec. 28 issued a generally similar forecast, an increase of about 4% vs. a year ago.

Better new-vehicle availability is making the sales increase possible. But the increase in supply is partly offset by a potential weakening in demand, as consumers worry about the economy, higher interest rates, and with a few exceptions, low incentives on new cars and trucks, analysts said.

New-vehicle availability has improved along with the supply of computer chips used in auto manufacturing. Chips are still in short supply, though, and inventory is still way, way below pre-pandemic levels.

December 2022 would be just the third month in a row new-vehicle inventory available for retail sale exceeded 1 million units, something that used to be utterly commonplace before the pandemic and chip shortage, J.D. Power and LMC Automotive said.

Fleet sales — to daily rental companies, and to commercial and government fleets — are also expected to increase in December. Fleets account for an estimated 17% of total sales in December, up from 10% a year ago.

“However, there are still not enough vehicles produced to meet demand,” according to the forecast.

That spells continued higher prices. Thomas King, president of the data and analytics division at J.D. Power, said average transaction prices are on pace to hit a record high in December of $46,382, an increase of 2.5% vs. December 2021.

The interest rate on the average new-vehicle loan is expected to reach 6.4% in December, up from about 3.9% a year ago, according to J.D. Power and LMC Automotive. The average monthly new-vehicle loan payment is an estimated $718, up 7% vs. a year ago, King said.

Conversely, the average incentive per unit is expected to be only $1,187, down from $1,511 a year ago. As a percentage of suggested retail price, the average incentive is expected to be 2.5%, down from about 3.3% a year earlier.