SANTA MONICA, Calif.–Retail sales of automobiles over last weekend’s Fourth of July holiday will be the next big test of industry’s strength and resiliency and a “litmus test for automakers in deciding to further pull back on incentives,” according to a new analysis.
ALG, a subsidiary of TrueCar, is projecting U.S. revenue from new vehicle sales will reach more than $39.9 billion for June 2020, down 25% (based on a non-adjusted daily selling rate) from a year ago and down 1.4% from last month.
“Due to seasonality, we typically see June new vehicle sales come in five to seven percent lower than May, so the fact that we are basically at parity month-over-month is actually demonstrating growth,” said Nick Woolard, Director of OEM and Affinity Partner Analytics for TrueCar. “That being said, we do not believe that ‘normal seasonality’ will probably apply for the rest of the year, especially with tax season being deferred to July.”
ATP Data
Meanwhile, the company is also predicting the average transaction prices (ATP) on vehicles will be up 3.2% in June, or $1,117 from a year ago, but down 0.2% or $88 from May of 2020.
“Average transactions prices continue to tick up year-over-year, but we are seeing signs of decline and expect a small dip in average transaction price month-over-month as automakers slowly pull back from zero percentage financing over 84 months that helped spur demand for higher price models and trim levels,” said Eric Lyman, chief industry analyst for ALG, a subsidiary of TrueCar. “While incentives are still up year-over-year, the aggressive incentives that came out fast and furiously in April and May to help alleviate sales pains are beginning to soften due to low inventory and assembly plants that are still not back to full production.