Even though the US car industry is reporting record highs, it’s not slowing down at all in order to keep the pace going, as shown through all the incentives and unsold cars lying around. It’s expected that incentives will reach new records in March. J.D Power and Associates suggest the average incentive in March per unit was $3,768.
It’s also expected that incentives could go above the 10% of suggested retail price threshold in March, for the ninth month in a row. Even though there are all these discounts to go around, a new car spends an average 70 days in a dealership lot before being sold. This is the biggest that figure has been since 2009.
To put it another way; Automotive News Data Center says that the US industry had 74-days worth of unsold trucks and cars on the first of March; up from 68 days in March of last year. This days-supply figure is an estimate of how long it would take to sell every car in inventory given the current sales rate for the month. The ideal industry benchmark is considered to be 60 days, which is a lot less than the current 74 days.
Trucks and commercial vehicles are selling a little faster than cars. March 1st saw a 79-day supply of cars, higher than the 71-day supply of trucks. There has long-since been a trend of drivers choosing trucks over cars, which this figure just seems to confirm. The good news is that levels were down in March. There was a 92-day supply of cars on February 1st, and an 80-day supply for trucks. The numbers sound bad, but they are slightly improving.
There is some good news for the automotive industry to cling on to. Even though transactions appear to be down, the average price that people are paying for their cars – even with incentives – is on the rise. J.D power suggests that new cars are selling for an average of $31,074 right now; just higher than the previous record of $31,049 set last year.
The automotive industry is in a strange place right now. Tesla and other electric cars are becoming increasingly common, while self-driving cars are also on the horizon. While the figures are suggesting things are looking up for the industry, all good things must come to an end. It will take some time yet to see where the industry goes from here but – if manufacturers have anything to say about it – sales will remain strong thanks to all the incentives being offered.