(August 30, 2021) New-vehicle retail sales for August are expected to decline from August 2020 and decline from August 2019, according to a joint forecast from J.D. Power and LMC Automotive. Retail sales of new vehicles this month are expected to reach 987,100 units, a 14.3% decrease compared with August 2020, and a 21.6% decrease compared with August 2019 when adjusted for selling days.
           
August 2021 has one fewer selling day than August 2020 and three fewer selling days than August 2019. Comparing the same sales volume without adjusting for the number of selling days translates to a decrease of 17.6% from 2020 and a decrease of 30.0% from 2019.

Total new-vehicle sales for August, including retail and non-retail transactions, are projected to reach 1,094,500 units, a 13.7% decrease from August 2020 and a 25.3% decrease from August 2019. Comparing the same sales volume without adjusting for the number of selling days translates to a decrease of 17.0% from 2020 and a decrease of 33.3% from 2019. The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 13.1 million units, down 2.1 million units from 2020 and down 4.0 million units from 2019.

“The month of August is historically a peak selling month as manufacturers launch promotional events to clear inventories of outgoing model-year vehicles and begin sales of the new model year. This year, however, the industry has insufficient inventory at dealerships to meet strong consumer demand. The consequence is that the retail sales pace is depressed, but transaction prices are elevated," said Thomas King, president of the data and analytics division at J.D. Power.


“Similar to last month, dealers currently have approximately 942,000 vehicles in inventory available for retail sale, compared with roughly 3.0 million in inventory two years ago. Although inventory is arriving at dealers daily, it is simply replacing the vehicles being sold, preventing dealers from increasing inventories to a level necessary to support a higher sales pace. This means the sales pace is being dictated by production levels rather than actual consumer demand.

“The consequences of the inventory situation are more apparent in months when sales volumes are typically high, such as August. For context, if August 2021 retail sales were to be at August 2019 levels of 1.4 million units (instead of the 987,000 retail sales forecast), dealer inventory would fall by 423,000 units to less than 519,000 units by month end. In other words, it is simply not feasible to achieve the sales rate observed for August in pre-pandemic years.”

When vehicles are delivered to dealers they sell quickly. This month, more than 49% of vehicles will be sold within 10 days of arriving at a dealership, up from 47% in July 2021 and up from only 26% in August 2019. The average number of days a new vehicle sits on a dealer lot before being sold is on pace to fall to a record low of 26 days, the first time on record below 30 days, down from 62 days a year ago, and down 4 days from last month.

For August, average transaction prices are expected reach an all-time high of $41,378, and the first time above the $41,000 level. For context, average transaction prices are trending to be over 16% higher in August 2021 than they were in August 2020. This is partially due to the continued retraction in manufacturer incentives.

The average manufacturer incentive per vehicle is on pace to be $1,823, a decrease of $2,132 from a year ago and the lowest amount on record for the month of August. Expressed as a percentage of the average vehicle MSRP, incentives for August 2021 are trending toward a record low of 4.3%, down nearly 5.3 percentage points from a year ago and the second consecutive month below 5%.