New Car Supply Rises In March, But Rising Interest Rates Keep Monthly Loan Payments Above $700

More evidence that the supply of new cars and trucks continues to improve, as March U.S. auto sales are on pace for an increase of about 6% in March vs. March 2022.

But does that mean availability — and pricing — are heading back to something like “normal” levels? No way, not yet.

Inventory is still so scarce relative to demand, that the average new-vehicle transaction price is headed for an all-time monthly March record of $45,818, up 3.5% vs. a year ago, according to a forecast from J.D. Power and LMC Automotive.

The forecast predicts March sales of about 1.3 million new cars and trucks for the month. That would take first-quarter sales to about 3.5 million, up about 7% vs. a year ago.

Despite better availability, higher interest rates are keeping the average monthly new-vehicle loan payment above $700, J.D. Power and LMC Automotive said. In March, the average monthly payment was an estimated $711, up about 7% vs. a year ago. The average payment topped $700 for the first time in July 2022.

The average interest rate for new-vehicle loans is an estimated 6.7% in March, up from about 4.4% a year ago, the forecast said. That also serves to prop up the average loan payment.

In addition, the forecasting firms said much of the increase in monthly sales is going to fleet sales, including daily rent-a-car fleets. That’s not doing anything to increase availability on dealer lots for individual new-vehicle buyers.

J.D. Power and LMC Automotive expect fleet sales of 240,200 in March, up 31.4% vs. March 2022. Fleets are expected to account for 19% of total light-vehicle sales for the month, up from 15% a year ago.

In a separate presentation on March 16, Cox Automotive said new-vehicle inventory earlier this month was up 68% vs. a year ago. But at fewer than 2 million units, inventory was still only about half what it was in 2019, pre-pandemic.