The number of new cars sold in the U.S. in September 2024 is expected to be less than the number sold in September 2023. But, there’s good reasons why that’s not bad news, experts say.
J.D. Power and GlobalData projected in their joint September forecast retail and non-retail new vehicle purchases for September 2024 to be 960,500, down 13.2 percent versus September 2023’s numbers (1,129,659 units).
September sales are expected to be down in large part due to the timing of Labor Day weekend. Auto sales calendars do not follow traditional Sunday through Saturday, first of the month through the last day of the month standards of measurement. Rather, they look at selling days.
Car dealerships are usually closed at least one day a week, meaning that rather than 28 to 31 selling days per month, there are fewer. September 2024 had 23 selling days. September 2023 had 26.
When adjusted for the number of selling days, September 2024 car sales are projected to have been just 1.8 percent less than September 2023’s numbers.
“September sales volumes will be lower than a year ago because of a calendar quirk that saw the Labor Day holiday weekend fall into the August sales month. This boosted August’s sales but will diminish September’s sales from a year ago,” Thomas King, president of data and analytics at J.D. Power said in a press release.
Mazda
Combining August 2024 and September 2024 sales and comparing them versus August 2023 and September 2023 sales shows an uptick of sales volume this year. The two firms project that Q3 2024 will reveal a 0.2 percent increase in sales from Q3 2023, with two less selling days.
“U.S. light vehicle sales in 2024 have been against a conflicting backdrop: Inventory has improved, incentives more available,” Stephanie Brinley, associate director of AutoIntelligence at S&P Global told Newsweek. “However, vehicle prices are receding very slowly and interest rates remain high. Over the course of 2024, buyers seem to be increasingly cautious, tempering growth potential. The situation means that 2024 light-vehicle growth is slower than what we saw in 2023, when there was slowly recovering inventory market and less uncertainty.”
How does this benefit buyers?
“From a consumer perspective, three key factors will shape auto sales for the remainder of the year: discounts (from both manufacturers and dealers), interest rates, and trade-in values,” Tony Salerno, managing director and practice leader of automotive advisory and analytics at J.D. Power told Newsweek.
Buyers could be in for big discounts heading into the holiday season. “While part of this is due to a shift toward more affordable vehicle segments, the bulk of the reduction comes from original equipment manufacturer incentives and dealer discounts. Most automakers have managed their inventory levels fairly well, but if days supply begins to increase, we can expect to see more incentives,” Salerno said.
J.D. Power and Global Data projected that average incentive spend in September 2024 per vehicle has grown 63.2 percent from September 2023. It is currently on track to reach $3,047.
Challenges continue for car dealerships
Buyers are shifting their behavior into more affordable models, Salerno said. This has lead to over a $1,000 drop in average transaction price per vehicle according to J.D. Power.
“Transaction prices are trending towards $44,467—down $1,296 or 2.8 percent—from September 2023. The combination of lower retail sales and lower transaction prices means that buyers are on track to spend nearly $40.4 billion on new vehicles this month—16.8 percent lower than September 2023,” the company’s press release reads.
On top of that, inventories are up.
“Retail inventory is projected to be 1.8 million units, a 6.2 percent increase from August and a 30.7 percent increase from September 2023. Rising inventories are leading to larger discounts from both manufacturers and retailers. However, the inventory situation continues to be inconsistent across brands and models, with some popular vehicles remaining in short supply,” King said.
Increased inventories are directly related to fewer vehicles arriving on the lot pre-sold by retailers. J.D. Power has forecasted that about one-third of those vehicles will sell within 10 days of arrival, down from 58 percent in March 2022.
The companies project that dealer profits will be down 29 percent in September 2024 versus September 2023 when the numbers are tallied.
How much are Americans paying per month for their new car?
J.D. Power and Global Data expect Americans will be spending an average of $734 per month on their vehicle purchase. This is up $11 from September 2023, despite lower interest rates.
Pandemic era leasing behaviors set up today’s woes
When new vehicles were in short supply during the COVID-19 pandemic, buying options were limited. And, many chose to cut short or run out their leases without replacing a household vehicle due to a lack of commuting.
“Lease expirations this September are down 28 percent from the prior year, leading to fewer opportunities for new sales as consumers have more discretion when to trade-in their vehicles – many of which are waiting for better deals,” Salerno said.
Photo by MANDEL NGAN/AFP via Getty Images
Larger economic uncertainties loom
Though the Federal Reserve recently lowered interest rates, larger economic uncertainties remain. “Uncertainty has a significant impact on consumer buying behavior, as it affects the decision-making processes and perceptions of risk. Once November is behind us, perhaps consumers will feel more certain about their future and get that new vehicle they’ve had their eye on,” Salerno said.
Which car brands are positioned to win or lose in Q3 and Q4 2024?
“Overall, we see the market stuck in neutral, with month-to-month variability in growth and seasonally adjust annual rate (SAAR). With that volatility, the contrast between brands on the upswing and those challenged is sharper,” Brinley said.
Brinley calls out Toyota and Honda as “showing growth significantly ahead of the overall industry” in 2024. Both companies have fresh lineups that are delivering product that hits home with the average consumer like the redesigned hybrid Toyota Camry and the family-friendly Honda CR-V.
General Motors
General Motors
“Toyota’s extensive hybrid model lineup is helping grow hybrid electric vehicle share and has a relatively fresh lineup. Honda has a good mix of fresh product with strong hybrid offerings. Hybrids are showing strong in 2024—something dominated by those brands,” she said.
Brinley calls out Chevrolet, Kia, Jeep and Tesla as the top brands “struggling” in 2024.
“Though Nissan performance often seems lackluster, its sales in year to date are not far off from overall industry, which suggests the brand is holding relatively steady.
“Chevrolet’s earlier decline has a chance of being reversed in the last half of the year, with both Equinox [internal combustion engine] and Equinox EV launched, increasing models and availability of the Silverado EV, a new Traverse firmly in market, and a new Suburban/Tahoe coming.
“Jeep and other Stellantis brands are struggling, with expectations for more incentives in the last quarter of the year. While its iconic vehicles are respected, the overall range is getting older.
“Tesla’s declines have been well documented. The brand is facing more competition, the market is facing the technology chasm from early adopter to early mainstream buyer and learning that is a massive bridge to gap, and in many ways, Tesla’s products seem old in 2024,” she said.
Sean Rayford/Getty Images
Impact of Hurricane Helene on new car sales
J.D. Power and Global Data do not plan to revise their forecast for September following the devastation of Hurricane Helene throughout America’s Southeastern states. Their October sales forecast is expected mid-month.
Salerno cautions against jumping to conclusions. “Weather-related events only delay sales. Typically, we see any lost sales made up in the next couple of weeks after the event has subsided. The replacement demand for damaged vehicles has a negligible lift in the new market,” he said.