December New-Vehicle Retail Sales up 11.9% as Consumer Spending on New Vehicles Reaches All-Time High

J.D. Power:

The Total Sales Forecast

Total new-vehicle sales for December 2024, including retail and non-retail transactions, are projected to reach 1,520,000, a 7.3% increase from December 2023 on a selling day adjusted basis, according to a joint forecast from J.D. Power and GlobalData. December 2024 has 25 selling days, one fewer than December 2023. Comparing the same sales volume without adjusting for the number of selling days translates to an increase of 3.1% from 2023.

The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 17.2 million units, up 1.1 million units from December 2023. New-vehicle total sales in Q4 2024 are projected to reach 4,241,000 units, a 5.9% increase from Q4 2023 when adjusted for selling days. New-vehicle total sales for 2024 are projected to reach 15,965,300 units, a 2.0% increase from 2023 when adjusted for selling days.

The Retail Sales Forecast

New-vehicle retail sales for December 2024 are expected to increase from a year ago. Retail sales of new vehicles are expected to reach 1,297,400, an 11.9% increase from December 2023 when adjusting for selling days. Comparing the same sales volume without adjusting for the number of selling days translates to an increase of 7.6% from 2023. New-vehicle retail sales in Q4 2024 are projected to reach 3,580,300 units, an 8.8% increase from Q4 2023 when adjusted for selling days. New-vehicle retail sales for 2024 are projected to reach 13,162,900 units, a 3.3% increase from 2023 when adjusted for selling days.

The Takeaways

Thomas King, president of the data and analytics division at J.D. Power:

“December results will cap off the year with a strong performance, highlighted not only by robust year-over-year sales growth, but also by the fact that consumer expenditures on new vehicles will reach the highest level for any month on record.

“Retail sales for December are on track to reach 1.3 million units, reflecting a solid 11.9% increase compared with December 2023. Consumer expenditures on new vehicles are projected to hit $56.4 billion, the highest monthly level ever recorded. This strong finish also means consumer expenditures on new vehicles will set an annual record of $586 billion. Notably, this marks the fourth consecutive year that consumers have spent more than half a trillion dollars on new-vehicle purchases.

“Retail inventory is projected to be 2.0 million units, a 1.3% decrease from November and a 24.7% increase from December 2023. Rising inventory levels are leading to deeper discounts from both manufacturers and retailers. However, inventory availability remains uneven across brands and models, with some high-volume vehicles still facing shortages.”

The average retail transaction price for new vehicles is up marginally from a year ago, trending toward $46,258—up $52 or 0.1%—from December 2023. The combination of considerably higher retail sales and slightly higher transaction prices means that buyers are on track to spend nearly $56.4 billion on new vehicles this month—8.1% higher than December 2023, and the highest of any month on record.

“Total retailer profit per unit—which includes vehicles gross plus finance and insurance income—is expected to be $2,107, down 19.7% from December 2023. The decline in profits is primarily driven by rising inventory levels, with fewer vehicles selling above the manufacturer's suggested retail price (MSRP). Thus far in December, only 11.8% of new vehicles have been sold above MSRP, which is down from 19.7% in December 2023.”

Total aggregate retailer profit from new-vehicle sales for this month is projected to be $2.6 billion, down 13.3% from December 2023.

“With increased inventory, fewer vehicles are being pre-sold by retailers, allowing more shoppers to purchase directly from dealer lots. J.D. Power forecasts that 28.2% of vehicles will sell within 10 days of arriving at the dealership, down from a peak of 58% in March 2022. The average time a new vehicle remains in the dealer's possession before sale is expected to be 55 days, up from 38 days a year ago.”

Manufacturer discounts are continuing to increase. The average incentive spend per vehicle is expected to grow 30.7% from December 2023 and is on track to reach $3,442. Expressed as a percentage of MSRP, incentive spending is currently at 6.6%, an increase of 1.4 percentage points from a year ago. Spending increased by $98 per unit from November 2024.

“One of the drivers of higher incentive spending from a year ago is the increased availability of discounting of lease payments. This month, leasing is expected to account for 22.7% of retail sales, up from 22.3% in December 2023.

“While attractive lease offers are driving an increase in the lease mix, the industry continues to contend with the lingering effect of reduced leasing activity from three years ago. The number of leases set to expire this month is down 10.5% from November and 41.3% lower than a year ago. With fewer leases maturing, there are less opportunities to drive sales.”

Average monthly finance payments this month are on pace to be $753, up $21 from December 2023. The average interest rate for new-vehicle loans is expected to be 6.09%, down 62 basis points from a year ago.

So far in December, average used-vehicle retail prices are $28,631, down $505 (-1.7%) from a year ago. The decline in used-vehicle values is translating to lower trade-in equity for owners, now trending toward $8,189—down $242 from a year ago.

“Despite challenges like high interest rates and declining trade-in values, the new-vehicle market remains strong. While per-unit profits are declining, resilient consumer demand—assisted by increased inventory and leasing activity—has supported a solid year-end performance. As the positive trends of 2024 continue into 2025, improved overall inventory and greater availability of affordable vehicles are expected to sustain sales momentum. Transaction prices and profitability for OEMs and retailers are likely to moderate slightly. However, this tradeoff between higher sales volumes and lower margins will ensure total profitability remains strong compared to historical levels.”

Sales & SAAR Comparison

The Details

• The average new-vehicle retail transaction price in December is expected to reach $46,258, up $52 from December 2023. The highest for any month—$47,329—was set in December 2022.
• Average incentive spending per unit in December is expected to reach $3,442, up $809 from December 2023. Spending as a percentage of the average MSRP is expected to increase to 6.6%, up 1.4 percentage points from December 2023.
• Average incentive spending per unit on trucks/SUVs in December is expected to be $3,576, up $806 from a year ago, while the average spending on cars is expected to be $2,771, up $750 from a year ago.
• Retail buyers are on pace to spend $56.4 billion on new vehicles, up $4.2 billion from December 2023.
• Trucks/SUVs are on pace to account for 82.4% of new-vehicle retail sales in December.
• Fleet sales are expected to total 222,616 units in December, down 13.8% from December 2023. Fleet volume is expected to account for 14.6% of total light-vehicle sales, down 3.6 percentage points from a year ago.
• Average interest rates for new-vehicle loans are expected to be 6.09%, down 62 basis points from a year ago.

EV Outlook

Elizabeth Krear, vice president of the electric vehicle practice at J.D. Power:

“The percentage of new-vehicle shoppers who say they’re interested in purchasing an EV for their next vehicle is 25%, which is down 2 percentage points from a year ago. However, adoption increased a percentage point this year as the retail share of EVs reaches 9%. New products and attractive pricing drove the growth. Specifically, offerings from GM, Honda, Hyundai and Kia in the popular compact and midsize SUV segments were influential, along with aggressive pricing strategies from Ford and Cadillac. Conversely, Tesla’s share of EV sales dipped this year, so all eyes will be on Tesla in 2025 to see how the company attempts to counter that decline.

“As the industry is poised to experience significant changes related to EV incentives and regulations, we anticipate the rate of EV adoption to decelerate. Even though shoppers will have more EV choices than ever to equivalent gas-powered models—now at 63% from 39% a year ago—a significant majority of EV buyers were influenced by incentives. A notable 87% of all EVs sold this year received an average federal incentive of $5,600. If the incentive is removed, this will put additional pressure on EV adoption, as purchase price and infrastructure remain the top two barriers to adoption.

“This year, EV sales growth increased at a pace twice that of infrastructure growth, while satisfaction in public charging reached a three-year low in Q3 2024. A slowing in EV adoption next year may give the ecosystem a chance to catch up with infrastructure. The transition from gas-powered vehicles to EVs has complex interdependent factors. As one factor changes, it has a ripple effect on other factors. In 2025, we expect to see ongoing contraction and expansion of the factors that make up the EV ecosystem. Monitoring the players who try to work in tandem to develop that ecosystem—and how consumers react to it—is an imperative element.”

Global Sales Outlook

Jeff Schuster, vice president of research, automotive at GlobalData:

“The global light-vehicle selling rate for November continued the strength from October and stood at 95 million units, marking the best result so far in 2024. Sales volume continued to grow in November on a year-over-year basis, with sales up 6% from November 2023. Year-to-date (YTD) sales stood at 80 million units, up nearly 2% from YTD 2023.

“Global sales were supported by sustained growth in key markets like China and North America. Chinese buyers are capitalizing on scrappage subsidies and a very competitive pricing environment, driving volume up 10%. North America was up 12% with increases in all three countries. Sales in Western Europe remain lackluster, down 3% as political and economic challenges persist, exacerbated by recent government turmoil in Germany and France.

“December is expected to remain in the range of 93-95 million units, closing the year out on a strong note. On a monthly basis, volume is projected to be up at least 5% with China leading the way, followed by growth in India. The surge in the United States is expected to drive North America to a flat position. Western Europe’s contraction is expected to be a drag on growth.

“The strength in the fourth quarter has led to an upward revision for 2024. The 2024 forecast is up nearly 700,000 to 88.7 million units from our November forecast, with volume now projected to increase 2% from 2023. While uncertainty remains high as attention shifts to 2025, the outlook has improved in an environment of easing inflationary pressure. Light-vehicle sales are projected to increase to 90.8 million units, a 2% increase from 2024.”

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