(Reuters) – Growth in U.S. new vehicle retail sales is expected to slow down further in July because of a limited supply of automobiles caused by a global semiconductor shortage, consultants J.D. Power and LMC Automotive said on Wednesday.
Retail sales are expected to reach 1.2 million units in the month, a 3.7% increase from the same period last year when adjusted for selling days, but a slump in expectations when compared to the preceding months.
The consultants had forecast sales growth of 110% for April, while the outlook fell to 34% and 12.4% for May and June, respectively.
A shortage of semiconductors has hampered automobile production and slowed down sales growth despite strong demand for personal transportation during the COVID-19 crisis. This has, in turn, pushed up prices.
“Consumers will spend more money buying new vehicles than ever before in the month of July, and dealer profits from selling new vehicles will reach an all-time high,” said Thomas King, president of data and analytics division at J.D. Power.
Average transaction prices are expected to rise 17% to $41,044, the highest on record, while the average incentive spending per unit is expected to fall to $2,065 from $4,235 last year.
The average number of days a new vehicle sits on a dealer lot before being sold is on pace to fall to a record low of 31 days, down from 75 days a year ago, said the statement.
The total seasonally adjusted annualized rate for new vehicle sales will be 15 million vehicles, up 0.4 million units from 2020 but 1.9 million units less than 2019.
(Reporting by Shreyasee Raj in Bengaluru; Editing by Shailesh Kuber)