US new car sales up but used car prices sliding

New light-vehicle sales are showing no signs of slowing, with September figures demonstrating solid year-over-year growth, according to the latest monthly sales statistics from J.D. Power and LMC Automotive.

Retail sales are projected to come in at 1 million units, a 94,000-unit increase from September 2013. The continued upward sales pace is noteworthy as it follows an exceptionally strong August when retail sales reached 1,378,588.

J.D. Power expects consumer spending on new vehicles (retail sales multiplied by the average transaction price) to exceed $30 billion this month, the highest level for September since 2004.

Total light-vehicle sales in September 2014 are expected to reach 1.25 million units, a 5% increase from September 2013. Following two consecutive months of market share below 15%, the fleet sales share of total light-vehicle sales is expected to rebound to 19% this month, the same level as in September 2013.

“The strength in automotive sales is undeniable, as August sales performance was well above expectations and there is no evidence of a payback in September, suggesting that the auto recovery still has some legs,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “On the heels of another increase in the 2014 expected volume, 2015 is expected to hit 16.7 million units with more upside potential than downside risk.”

However Larry Dominique, an executive vice president of auto-pricing site TrueCar, warns that the auto industry sales recovery means that: “We’re going to see a tremendous increase in used-car supply over the next couple of years.”

Dominique cautions a steep decline in used car prices could result in less valuable trade-ins for customers who may need larger loans and more expensive leases. Figures from consultancy CNW Research suggest the decline may already be starting. Its latest data show at retail, the average used car sold at a franchised auto dealership went for $10,883 last month, down 1.6% from a year ago and 2.4% from July.