January U.S. auto sales: Low inventory still cause for concern; transaction prices set record

2022 U.S. auto sales kicked things off with a SAAR (seasonally adjusted annual rate) of 15.2, the highest monthly SAAR reported since June of 2021. On this edition of Inside Automotive, we’re pleased to welcome back Tyson Jominy, Vice President of Data and Analytics at J.D. Power, to break down the positive highlights as well as the challenges still causing stress for the auto industry. 

January auto sales results appear on the surface to be very strong. However, Jominy points out that January is typically a small month in the auto industry. Right now, many car dealers are operating on a, one car in, one car out system, which lends itself really well to smaller months. In total, January auto sales ended below 1.0 million for the first time since 2013.

Vehicle inventory hasn’t reached over one million units at retailers since June, and January ended at 830,000 retail units on the ground versus 2.7 million in January of 2020. This extensive decrease has created a sticky situation for both OEMs and car dealers, as we all know. Despite, record profitability, automotive retail professionals understand consumer demand and the potential that more inventory can bring right now. It’s becoming a competitive race between manufacturers to see who can resolve this crisis first. 

Related: How past and current auto retail trends are shaping the outlook for 2022 – Jonathan Smoke | Cox Automotive

Moving on to transaction prices, January set a monthly record at around $44,300. This is over $10,000 more than the average price in January 2020. Typically, average prices drop around 3%-4% in January. Not this year, says Jominy. This January, prices only dropped 1.5% from December. Consumers are still willing to pay these prices as well. Luxury vehicle sales had the best January on record. The mix of the industry is up nearly a full point versus January 2020. EV-maker Tesla appears to be benefitting the most from this with other manufacturers coming in behind. 

With these high transaction prices, subprime buyers are only 5.4%, nearly cut in half from two years ago. Lots of consumers of extending their financing terms. Negative equity came in at only 15% of sales and average trade equity soars to $9500. Lease type of sales was down 19% and finance sales have risen 11%.

For more great industry insights, be sure to watch the complete interview with Tyson Jominy above.

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