U.S. Auto Sales Decline Less Scary Than It Looks, As The High End Flourishes – Forbes

Hand-wringing in the press lately about a U.S. auto sales downturn is somewhat misplaced; auto sales are doing just fine at the more profitable, high end of the market, according to a J.D. Power analysis.

“With the volume contraction focused of the low end of the market, the dip in industry retail sales poses a smaller threat to OEM profitability than headline sales results suggest,” said Thomas King, senior vice president, Data and Analytics Division at J.D. Power, in a report on April 26. OEMs are original-equipment manufacturers — that is, automakers.

High-end cars and trucks — especially trucks — are selling well. It’s the low end that’s off, analysts said.


J.D. Power expects April auto sales of about 1.4 million cars and trucks, a decline of about 3.5% vs. April 2018 based on the daily selling rate, when automakers in the U.S. market report April sales on May 1.

Most of that decline comes from cheaper vehicles, the company said. Based on sales results for the first part of April, J.D. Power said April sales for new vehicles under $20,000 were down 25% from last year, while sales for new vehicles costing $40,000 and higher were up 7%.

For the first quarter, sales for vehicles priced below $20,000 were down 14% from a year ago, King said in a presentation at the AutoForum conference in New York on April 16, sponsored by J.D. Power, the National Automobile Dealers Association, and the New York International Auto Show.

Vehicles that sold for $20,000 to $30,000 were down 9%; $30,000 to $40,000, up 1%; over-$40,000, up 7%, he said. The split between high-priced and low-priced sales also mirrors the split between slow-selling cars as a category vs. hot-selling trucks, which tend to be bigger and more expensive than cars, J.D. Power said.

The average new-vehicle price was headed to an April record of $33,695, the company said. That would be an increase of almost 4%, or $1,235 from a year ago.


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