New vehicle sales are set to decline in April after a strong first quarter but will maintain a healthy pace thanks to better affordability, more inventory, and stable demand.
Cox Automotive forecasts April new vehicle sales volumes will reach 1.34 million units, a year-over-year decline of 2.2% and a 6.8% decline from March. While a 7% increase in average tax refund amounts helped drive demand ahead of prior-year levels in February and March, this month’s drop marks the end of tax season for most U.S. citizens, explaining the weaker sales.
However, while sales were lower on an annual basis, the new vehicle sales pace remains on track to make 2024 the best sales year since the onset of the COVID-19 pandemic. The seasonally adjusted annual rate (SAAR) is set to reach 15.9 million by the end of April, 1.3% ahead of last year’s speed and 2.6% faster than in March.
Overall, the new vehicle market remains healthy, although the heavy variances in month-to-month sales should indicate to dealers that volatility is still very much the norm. “Since April 2023, the new-vehicle SAAR has experienced some large swings…This month, more volatility in the market is also expected, although the sales pace is anticipated to rise slightly,” commented Charlie Chesbrough, Cox Automotive senior economist.
However, while new vehicle sales may be rising at a slower pace than desired, dealers should still take comfort in the continued strength of demand. “Despite high interest rates and elevated vehicle prices, consumers remain resilient,” Chesbrough adds. “Sales growth may be sluggish, but growth continues. And we expect these conditions to persist throughout the year.”
