While car dealers across the country prepare for a burst of activity during the long Thanksgiving holiday weekend, sales of new vehicles are continuing to recover during November, according to an analysis by TrueCar Inc. and its ALG Inc. subsidiary.
The analysis projects total new vehicle sales will reach 1.24 units in November 2020, down 0.5% from a year ago when the industry surged towards to another year 17 million sales. However, the dip is driven by a double-digit decrease in fleet sales and the number of people heading to dealers, either in person or via the internet, will rise this month especially the long holiday weekend and its expected good deals.
“As Thanksgiving weekend and Black Friday inch closer, we anticipate the new vehicle sales momentum from the past three months to continue with increases year-over-year for new retail sales,” said Eric Lyman, chief industry analyst for ALG.
“We expect many consumers who have not been financially affected by the pandemic to make their vehicle purchases this month, especially with fewer people traveling this holiday season and with inventory rebounding.”
In addition, the seasonally adjusted annualized rate (SAAR) for total light vehicle sales is an estimated 16.4 million units, which is a vast improvement from the drop in sales the industry experienced when the initial response to the COVID-19 cut sales dramatically.
As dealers and manufacturers have deployed new sales techniques, TrueCar and ALG expect U.S. retail deliveries of new cars and light trucks, excluding fleet sales, to be 1.1 million units, an increase of 2.9% from a year ago when adjusted for the same number of selling days.
The average transaction prices are projected to be up 4.7% or $1,707 from a year ago and up 2.3% or $838 from October 2020. TrueCar also expects U.S. revenue from new vehicle sales will reach more than $47 billion for November 2020, down 7.9% from a year ago and down 6.6% from last month.
“New vehicle average transaction prices are making a significant jump for November, with prices increasing more than $1,700 from a year ago,” said Nick Woolard, director of OEM Analytics at TrueCar.
“While it’s somewhat surprising to see this trend during a period of economic uncertainty, this is being driven by consumers who continue to gravitate toward utilities and pickup trucks at higher price points.”
“Incentives are up are slightly for November year-over-year and shoppers can expect to find good Black Friday deals like any other year. While inventory has been rebounding, it varies by brand and model so if there is a vehicle that a consumer has their heart set on, we recommend moving quickly to make the purchase and secure the vehicle,” added Woolard.
A panel of economists from the University of Michigan said last week that the outlook for sales in 2021, while promising, will depend in part on the broader U.S. economy pulling out of a recession that cut the U.S. gross domestic product by an estimated 3.6% in 2020.
The broader economy is sending out conflicting signals this week with the Dow Jones, rising to a record level but the Conference Board reporting a decline in consumer confidence. Auto sales generally benefit from a rising stock market, while a drop in consumer confidence traditionally tends to hurt sales of new vehicles.
“Last year, the average discount on Black Friday was 10.2% off the manufacturer’s suggested retail price and we expect similar deals for this year,” added Lyman.
Fleet sales for November 2020 are expected to be down 21% from a year ago and up 38% from October 2020 when adjusted for the same number of selling days. Used vehicle sales for November 2020 are expected to reach 3 million, down 1% from a year ago and down 11% from October 2020.