According to a joint report by J.D. Power and GlobalData, new-vehicle retail sales in the U.S. are expected to decline by 1.8% in January 2024 compared to the same month in the previous year. This is despite the fact that January 2024 has an extra selling day. The report suggests that the sales pace in January has slowed down after reaching its peak in December, which was fueled by increased discounts from manufacturers clearing their inventory.
One factor that may have contributed to the dip in sales is the change in eligibility rules for federal EV tax credits. Previously, popular electric vehicles were eligible for a tax credit of $7,500. However, starting from January 1, many EV models no longer qualify for this tax credit. As a result, buyers may have made their purchases in December to take advantage of the credit, leading to lower sales in January.
Another contributing factor to the decline in sales is the shift in consumer preference towards smaller and more affordable vehicle segments. The availability of these segments has increased, leading to a decline in the average new-vehicle retail transaction price. According to Thomas King, President of Data and Analytics at J.D. Power, the average transaction price for January is trending towards $45,106, a decrease of $1,636 compared to January last year. As a result, retail buyers are expected to spend only $37 billion on new vehicles in January, a decrease of $0.7 billion from the same month last year.
The report predicts that retail sales in January 2024 will reach 862,445 units, down from the 1,197,943 units reported in December 2023.
Overall, these findings suggest that the U.S. new-vehicle market is experiencing a slight slowdown in January 2024. However, it’s important to note that these figures are specific to the retail sales segment and may not reflect the entire automotive industry. Factors such as changes in tax incentives, consumer preferences, and availability of affordable vehicle segments are likely to continue shaping the market in the coming months.
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