July 2024 Automotive Market Overview
The U.S. automotive market is witnessing notable trends and shifts this July, according to the latest forecast from J.D. Power and GlobalData. The overall market shows resilience with a slight increase in both new and used vehicle sales, coupled with evolving consumer preferences and economic factors.
New Vehicle Sales Surge
In July 2024, new vehicle sales have experienced a positive trajectory. Retail sales are forecasted to reach 1,135,301 units, marking a 5% increase from July 2023. Total sales, including fleet sales, are expected to be 1,340,513 units, which is 2.8% higher than the previous year. This growth reflects strong consumer demand, particularly in the truck and SUV segments, which are projected to constitute 79.9% of new-vehicle retail sales.
Price Trends and Incentives
The average transaction price for new vehicles in July is anticipated to be $44,271, a decrease of $1,166 from July 2023. Despite this drop, consumers are spending more overall due to higher sales volumes. Incentive spending has also seen an uptick, with an average of $2,892 per unit, up $990 from last year. Trucks and SUVs are benefiting the most from these incentives, with an average spending of $3,016 per unit. On the other hand, the average spending on cars is expected to be $2,391, up $660 from a year ago.
Used Vehicle Market Dynamics
The used vehicle market is also seeing changes, with average retail prices at $28,070, reflecting a 5.4% decrease from the previous year. This reduction is influencing trade-in values, which have dropped to $7,809, down $1,118 from a year ago. The lower prices are providing more affordable options for consumers, making it a buyer's market for used vehicles.
Electric Vehicle Adoption
The electric vehicle (EV) segment is growing, albeit at a slower pace. Premium EV sales have declined by 13%, primarily driven by a 22% decrease in Tesla sales. However, the mass market segment has surged by 63%, thanks to better product availability and more competitive pricing. Significant price reductions in high-volume segments, such as compact SUVs, are closing the affordability gap between EVs and traditional gasoline-powered vehicles.
Elizabeth Krear, Vice President of Electric Vehicle Practice at J.D. Power, highlighted that while affordability in the premium segment has reached parity with gas-powered versions, the mass market still has room to grow. Notable improvements have been seen in the average transaction price for compact SUVs, which has declined by more than $10,000. The five-year total cost of ownership for vehicles like the Chevrolet Blazer EV and Ford F-150 Lightning is now less than comparable gas-powered models. However, the growth in charging infrastructure remains a critical component for continued EV adoption.
Interest Rates and Financing
The average interest rates for new-vehicle loans are expected to be 6.90%, down 15 basis points from a year ago. This slight decrease in financing costs can help sustain the purchasing power of consumers, even as vehicle prices remain relatively high.
Fleet Sales Trends
Fleet sales are expected to total 205,212 units in July, down 8.1% from July 2023. Fleet volume is projected to account for 15.3% of total light-vehicle sales, down 1.8 percentage points from a year ago.
Market Outlook and Future Trends
Looking ahead, the market is set for an interesting period, particularly with the upcoming Labor Day holiday, which traditionally sees a spike in sales due to aggressive discounts and promotions. Historically, the Labor Day weekend has been an excellent opportunity to find great deals on prior model-year vehicles, and this year is expected to be no different.
Additionally, improvements in EV infrastructure and affordability are expected to drive further adoption, especially among mainstream consumers. The J.D. Power EV Index, which tracks monthly consumer interest, product availability, affordability, charging infrastructure, and owner satisfaction, indicates that as availability and affordability continue to improve in the mass market segment, EVs will attract more mainstream shoppers. However, the biannually updated J.D. Power EV retail share forecast for 2024 has been reduced to 9% from 12%, underscoring the need for continued advancements in charging infrastructure and consumer confidence in price parity.
In conclusion, the U.S. automotive market in July 2024 is characterized by robust new vehicle sales, strategic pricing, and incentives, alongside a growing but evolving EV landscape. These trends indicate a dynamic market responding to economic conditions and consumer preferences.
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