Auto sales forecast — April will be off 23% compared to 2021



(April 27, 2022) New-vehicle retail sales for April are expected to decline when compared with April 2021, according to a joint forecast from J.D. Power and LMC Automotive. Retail sales of new vehicles this month are expected to reach 1,076,200 units, a 23% decrease compared with April 2021 when adjusted for selling days. April 2022 has one more selling day compared to April 2021. Comparing the same sales volume without adjusting for the number of selling days translates to a decrease of 20.9% from 2021.

Total new-vehicle sales for April 2022, including retail and non-retail transactions, are projected to reach 1,241,300 units, a 21.5% decrease from April 2021. Comparing the same sales volume without adjusting for the number of selling days translates to a decrease of 18.5% from 2021.

The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 14.5 million units, down 3.9 million units from 2021.

“The April sales pace may look disappointing compared with April 2021, but last April’s record sales pace was enabled by the combination of extremely strong consumer demand and enough inventory (nearly 1.7 million units) to turn that demand into actual sales. This April, demand remains strong, but with fewer than 900,000 units in inventory at dealerships, sales volumes will necessarily be well below year ago levels," said Thomas King, president of the data and analytics division at J.D. Power:


“However, as has been the case for the past two quarters, inventory constraints are delivering record prices and profitability. New-vehicle prices continue to set records, with the average transaction price expected to reach an April record of $45,232 — an 18.7% increase from a year ago and the second-highest level on record behind $45, 247 set in December 2021.”

The growth in transaction prices means that, while the sales pace is down 23.8% year over year, consumers will spend $48.7 billion on new vehicles this month, the second-highest level ever for the month of April and down just 6.1% from April 2021.

“Given the strong demand and lack of inventory, it is unsurprising that discounts from manufacturers continue to be minimal. For April, the average incentive spend per vehicle is on pace to reach an all-time low of $1,034, a decrease of 65.5% from a year ago. Incentive spending per vehicle expressed as a percentage of the average vehicle MSRP is also trending toward an all-time low of 2.3%, down 4.8 percentage points from April 2021 and the third consecutive month below 3.0%. One of the factors contributing to the reduction in incentive spending is the lack of discounting on vehicles that are leased. Leases accounted for 30% of all new-vehicle retail sales in 2019. This month, leasing will account for just 18% of retail sales.”

As manufacturer discounts have fallen to record lows, dealer profit per unit continues to be at record highs. Total retailer profit per unit — inclusive of grosses and finance and insurance income is on pace to reach a monthly record $5,046, an increase of $2,313 from a year ago. Six of the past seven months have seen retailer profit per unit at or above $5,000.

This elevated per-unit profit level is more than offsetting the drop in sales volume as total aggregate retailer profits from new-vehicle sales is projected to be up 46.0% from April 2021, reaching $5.4 billion, the best April ever and the second-highest amount of any month on record.