New-Vehicle Sales Slide Again; Sixth Monthly Decline of 2016

While the presidential election had the potential to disrupt vehicle sales in the first half of the month, in reality, the impact was minimal. This is consistent with past elections when a small suppression of sales during the election was offset by gains post-election.

Full-month performance will be heavily influenced by sales during the Thanksgiving weekend, which is one of the busiest selling periods of the year and is expected to account for one-fourth of November sales. A key driver of vehicle demand during the Thanksgiving weekend is the availability of year-end incentive programs, which improve vehicle affordability. Incentive spending thus far in November is $3,886 per unit, up 15% from $3,374 in November 2015 and the second-highest level ever behind the record $3,939 set in September.  

Deirdre Borrego, senior vice president and general manager of automotive data and analytics at J.D. Power, said: "The election had a minimal effect on vehicle sales. While sales volume was suppressed for a short period during the election, the declines were quickly recouped by the end of the election week. Although we are forecasting another decline in retail sales, it is important to note that in absolute terms vehicle sales remain close to record levels while transaction prices are at record highs. However, these results are being driven in part by elevated incentive levels, which represent a meaningful risk to the long-term health of the auto industry."

• The seasonally adjusted annualized rate (SAAR) for retail sales in November 2016 is projected to reach 13.9 million units, up from 13.8 million units in November 2015. The SAAR for total sales is projected at 17.9 million units in October 2016, down from 18.0 million units a year ago.
• Fleet sales are expected to total 252,900 units in November, down 9.3% on a selling-day adjusted basis from November 2015. Fleet volume is expected to account for 18.3% of total light-vehicle sales, down from 19.5% in November 2015. 
• The average new-vehicle retail transaction price thus far in November is $31,645, a record for the month surpassing the previous high of $31,397 set in November 2015.
• With high absolute retail sales volumes and record transaction prices for the month, consumers are on pace to spend $35.7 billion on new vehicles in November, surpassing the record high of $33.7 billion for the month of November, set in 2014. 
• Trucks account for 62.7% of new-vehicle retail sales so far in November, matching the record set in October but up from 59.8% in November 2015.
• The model-year transition remains slower in 2016 than it was a year ago, with 50% of retail sales thus far in November being 2017 model-year vehicles. During the same period in November 2016, 54% of sales were 2016 model-year cars and light trucks.  
• Retail sales year to date through the end of October are expected to be down 1.0%, compared with the same period in 2015, while total sales remain positive with volume expected to be up 0.3%.

Jeff Schuster, senior vice president of forecasting at LMC Automotive, said: "The level of uncertainty in the market is high, but thus far the financial markets have shrugged off adverse policy risk related to trade and immigration under President-elect Trump and are expecting a fiscal stimulus boost that could spill over to autos. Stimulus watch, combined with the likelihood that incentives have pulled forward retail demand and will push 2016 to a near-record level, is making 2017 a pivotal year directionally for auto sales. The economy and industry could be facing a boom or bust depending on which policies are focused on and implemented."

• LMC Automotive's forecast for full-year total light-vehicle sales is 17.4 million units, but has increased slightly and now is on the cusp of topping 2015 by 10,000 units. The forecast for retail light-vehicle sales has increased slightly to 14.1 million units from the previous projection of 14.0 million units but down 1.5% from 2015.
• LMC is forecasting 17.4 million units for total light-vehicle sales in 2017, with retail light-vehicle sales expected to be down for a second year, to 14.0 million units.

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Media Relations Contacts
John Tews; J.D. Power; Troy, Mich.; 248-680-6218; [email protected] 
Emmie Littlejohn; LMC Automotive; Troy, Mich.; 248-817-2100; [email protected]

No advertising or other promotional use can be made of the information in this release without the express prior written consent of J.D. Power or LMC Automotive. www.jdpower.com/corporate  www.lmc-auto.com

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SOURCE J.D. Power

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