In addition to pent-up retail demand, a continued rise in fleet sales is expected to drive strong June deliveries as automakers now have more inventory to direct to commercial and government channels instead of focusing production on retail customers.
J.D. Power anticipates fleet sales in June will rise 55 percent from a year ago, with fleet volume expected to account for 20 percent of total light-vehicle sales, up from 16 percent in June 2022.
Cox Automotive expects full-year fleet sales of 2.6 million, up from 1.8 million in 2022.
“Sales to fleet customers are rising faster as manufacturers leverage higher vehicle production to allocate more vehicles to those fleet customers,” King said.
Incentives also continue to creep up from recent lows.
J.D. Power-GlobalData says discounts in June were relatively consistent with May levels, but have “increased materially from a year ago.”
It forecasts the average incentive spend per vehicle has risen 96 percent from June 2022 and is currently on track to reach $1,798. Expressed as a percentage of MSRP, incentive spending is currently trending at 3.7 percent, J.D. Power-GlobalData says, an increase of 1.7 percentage points from June 2022.
It also says discounts on leased vehicles have risen in recent months, and that it expects leasing to account for 21 percent of retail sales in June, up from the low of 16 percent in September 2022.
King said a mix of increased transaction prices and high interest rates has sent monthly payments higher.
“The average monthly finance payment in June is on pace to be $726, up $27 from June 2022,” he said. “That translates to a 3.9 percent increase in monthly payments from a year ago. The average interest rate for new-vehicle loans is expected to be 7 percent, an increase of 194 basis points from a year ago.”
