Consumers are on track to spend $215 billion on new vehicles during the first half of this year — almost $5 billion more than the first six months of 2017 — despite a decrease in units sold, according to a new report by J.D. Power and LMC Automotive.
In fact, the first six months of 2018 is forecast to deliver the “weakest industry retail sales results since 2014,” said Thomas King, senior vice president of the Data and Analytics Division at J.D. Power.
However, the data reveals that weaker sales volumes are offset by higher prices paid, which are expected to reach a record $32,221, surpassing the previous high of $31,397 set in the first half of 2017. Additionally, consumers’ average incentive spending per unit through the first six months of the year is up at $3,892 compared with $3,774 from the prior year.
Although the data shows consumers are willing to spend more on vehicles right now, the tariff threats will send prices “skyrocketing” which is going to result in a “significant pullback” in units sold, Cody Lusk, chief executive of the American International Automobile Dealers Association, told Auto Finance News.
Tariffs are causing a high level of “uncertainty and negative effects” that are causing “profit and volume warnings,” said Jeff Schuster, LMC Automotive’s President of American Operations and Global Vehicle Forecasts. “A trade war involving vehicles would be devastating to sales volume in the U.S. and other key markets. No one wins when more than a million units annually are at risk in the U.S.”
In terms of units sold, fleet sales are expected to total 300,200 units in June, a decrease of 4% compared with June 2017. Fleet volume is down by 1% versus last year, and the number of days new vehicles sit on a dealer lot remained flat at 70 days versus last year.
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