New car sales are forecast to fall by more than 20% compared to last May

With rising costs and low inventory plaguing the industry, buyers can not only take a break, but nowadays it is becoming impossible to bring a new car home.

Automotive research firm JD Power and LMC Automotive say new car sales in the United States are projected to decline by 20.9% in May, compared to the same period last year. For the twelfth consecutive month, the list of new vehicles is below one million units, according to CNN.

The sales drop represents a $ 45.4 billion decline in new car purchases from May 2021 to $ 45.4 billion, although the average transaction value for a new car is expected to reach $ 44,832, an increase of 15.7% over the same month last year.

Multiple factors, such as the global shortage of semiconductors and the struggle to restart production lines amid a global epidemic, are contributing to lower stocks and higher prices.

Read more: The average age of vehicles on U.S. roads has risen to an all-time high of 12.2 years amid supply shortages

Thomas King, president of JD Power’s data and analytics division, said the industry’s sales momentum is determined by how many units are delivered to retailers per month and far more than supply meets demand, adding that “record transaction price results.” “

This is not to say that people are reluctant to buy vehicles, demand is too high, automakers cannot afford them, and dealerships have consequently marked the models in their stock. While the news is bad for consumers, it is not so devastating for dealerships who have recently made record-breaking profits.

According to JD Power and LMC Automotive, higher prices offset the decline in sales. Prices should be reduced by the second half of 2022 when most automakers are planning to increase production, but that doesn’t mean they’re actually going, according to King.

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