March brought some good news for dealers who continue to battle for new- and used-vehicle sales in an economy ripe with high interest rates and manufacturers’ profit-reducing incentives.
The true bright spot was in used-vehicle sales that were up 18.5% month-over-month. Days’ supply was 44, down from 53 at the beginning of February, reports Cox Automotive. And the 27 selling days in March ’24, the same number as in ‘23, saw new-car sales spring ahead 5.1% from the previous year. That’s up 15.5% from February ’24, reports automotive industry information and data service MarkLines.
“The positive moves were assisted by the first material decline in interest rates in over two years,” says Cox Automotive Chief Economist Jonathan Smoke. “However, given the move-up in rates so far in April, that decline is likely to be short-lived.”
And that will continue to dig into dealer profits. Although income growth continued, average new-vehicle sale prices decreased as incentives swelled.
Cox reports the typical payment decreased 1.2%, and the median number of weeks of income needed to purchase the average new vehicle declined to 36.9 from an upwardly revised 37.5 weeks in February.
Other data points Cox shares include:
- The typical new-vehicle loan interest rate declined 15 basis points to 10.47% in March, which was the lowest average since September.
- Median income grew 0.3%, while the average new-vehicle transaction price declined 0.1%. As a result of these changes, the estimated typical monthly payment decreased 1.2% to $744 from $753 in February. The average monthly payment peaked at $795 in December 2022.
- New-vehicle affordability in March was better than a year ago when prices were higher, but interest rates were lower. The estimated number of weeks of median income needed to purchase the average new vehicle in March was down 6.2% from last year.
