U.S. new vehicle sales is expected to fall in April, as low inventories and rising interest rates boost prices amid high demand, consultants J.D. Power and LMC Automotive said.
U.S. retail sales of new vehicles could fall 23.8% to 1.1 million units in April from a year earlier, according to a report released by the consultants on Wednesday.
Demand remains strong, but with fewer than 900,000 units in inventory at dealerships, sales volumes will be well below year-ago levels, said Thomas King, president of the data and analytics division at J.D. Powers.
The automotive sector has been hit hard by supply issues, with production being hampered for more than a year by a global shortage of electronic components and supply bottlenecks due to COVID-19 lockdowns in China and the war in Ukraine.
The average transaction price is expected to reach an April record of $45,232, an 18.7% increase from a year ago and the second-highest level since December last year.
Rising interest rates also pose a threat to current transaction prices, with the average interest rate for loans in April expected to increase 33 basis points from a year ago to 4.61%, the consultants said.
The seasonally adjusted annualized rate for total new-vehicle sales is expected to be 14.5 million units in April, down from 3.9 million units last year.
The consultants said that the global forecast for light vehicle sales has now slipped to 81.7 million units in 2022, down 900,000 units from last month.
Total new-vehicle sales for April 2022, including retail and non-retail transactions, are projected to reach 1.2 million units, a 21.5% decrease from last year.
(Reporting by Kannaki Deka in Bengaluru; Editing by Amy Caren Daniel)