New vehicle supply levels recovered to their highest levels since June 2020 in February while prices continued to decline.

According to a new forecast from J.D. Power and LMC Automotive, new-vehicle retail sales for August are expected to decline compared to August 2021. Combined with record-setting new-vehicle prices and retailers struggling to keep sufficient inventory to meet consumer demand, the forecast suggests a slowing sales pace. However, despite increasing interest rates, transaction prices and profits continue to rise.  

Retail sales for this month are forecasted to reach 980,400 units, a decrease of 2.6% when adjusted for selling days. August 2022 had one additional selling day compared to the same month last year.   

Total new-vehicle sales, including retail and non-retail transactions, are expected to reach 1,136,800 units. That’s an increase of 0.6% from August 2021. The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 13.3 million units, up 0.2 million units from 2021. 

Thomas King, President of the Data and Analytics Division at J.D. Power, said August is typically a high-volume sales month as manufacturers launch marketing actions to clear out the last model-year vehicles. “This August, the industry is still constrained by insufficient inventory to meet robust consumer demand,” he said.   

“August is on track to be the 10th consecutive month that retail inventory closes below 900,000 units,” King added. He mentioned that a significant portion of vehicles are being sold before they reach the dealerships.    

New-vehicle prices continue to set records, with the average transaction price expected to hit $46,259. That number represents an increase of 11.5% over a year ago and would be the highest on record. So, despite a slowing sales pace, buyers are still spending at an incredible rate.

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