Power Information Network Reports: Despite Higher Transaction Prices, New Vehicles Spend Less Time
17 May 2006
WESTLAKE VILLAGE, Calif.: —For the first time in three years, the average days to turn (the number of days a vehicle sits on a dealership lot) for the new-vehicle retail market has consistently been less than 60 days, even as new-vehicle transaction prices rise, according to real-time retail transaction data from the Power Information Network (PIN), a division of J.D. Power and Associates. To better reflect consumer activity related to new-vehicle sales, PIN data includes retail transactions only and does not include fleet.
While days to turn varies from one vehicle manufacturer to another, the average days to turn for the industry has been less than 60 days in each of the past eight months, from September 2005 through April 2006. The previous time period this occurred was from June 2002 through January 2003. Although new vehicles are spending less time on the lot, transaction prices (vehicle price less customer cash rebates) have increased when compared to the same month a year ago for 23 consecutive months since June of 2004.
“The steady increase in the price buyers paid for their new vehicles and ongoing low days to turn both lend themselves to increased profitability for the retailer and the manufacturer,” said Tom Libby, senior director of industry analysis at PIN. “Despite the doom and gloom we frequently read about—perceived rising fuel prices, global political uncertainty and struggling domestic auto manufacturers—the data show that in some respects, the U.S. new-vehicle industry is doing well.”
At the segment level, the turn rate for some segments is particularly low. In April, the entry compact car segment had an average days to turn of only 38 days, due in part to the successful launches of the Toyota Yaris and Honda Fit. Premium compact cars sat on dealer lots an average of 44 days, benefiting from the success of the newly launched Dodge Caliber, the redesigned 2006 Honda Civic, the 2006 Chevrolet HHR and the Toyota Prius, among others. At the other end of the price spectrum, the premium luxury car segment had an average turn rate of just 35 days in April, with the BMW 7-Series and redesigned Mercedes-Benz S-Class having exceptionally low turn rates.
The recent increase in new-vehicle transaction prices can be partially attributed to a gradual decline in the use of customer cash rebates. The average rebate has declined every month this year when compared with the same month a year ago. Additionally, the percentage of transactions including a rebate has also decreased slightly in every month. In April 2005, for example, 57 percent of transactions included a rebate. In April 2006, however, 53 percent of transactions included a rebate.
“The absence of excessive inventory—which has plagued automakers in recent years—could mean that the mid-year incentive programs that have occurred in the past to drive sales will not be necessary this year,” said Bob Schnorbus, chief economist of global forecasting at J.D. Power and Associates. “While this is positive for the industry, it may not be good for consumers who are anticipating generous incentives when shopping for a new vehicle this summer.”
About Power Information Network (PIN)
PIN’s automotive solutions are based on the collection and analysis of daily new- and used-vehicle retail transaction information from more than 10,000 automotive dealership franchises in North America. PIN’s industry-leading automotive solutions incorporate consumer demand and sales information to improve business for automotive dealers, manufacturers, lenders, and other companies in the industry. Additional information is available at www.powerinfonet.com
About J.D. Power and Associates
Headquartered in Westlake Village, Calif., J.D. Power and Associates is an ISO 9001-registered global marketing information services firm operating in key business sectors including market research, forecasting, consulting, training and customer satisfaction. The firm’s quality and satisfaction measurements are based on responses from millions of consumers annually. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.
About The McGraw-Hill Companies
Founded in 1888, The McGraw-Hill Companies is a leading global information services provider meeting worldwide needs in the financial services, education and business information markets through leading brands such as Standard & Poor’s, McGraw-Hill Education, BusinessWeek and J.D. Power and Associates. The Corporation has more than 290 offices in 38 countries. Sales in 2005 were $6.0 billion. Additional information is available at http://www.mcgraw-hill.com.
- Contact Information
- John Tews
- J.D. Power and Associates
- Contact via E-mail
This news content was configured by WebWire editorial staff. Linking is permitted.
News Release Distribution and Press Release Distribution Services Provided by WebWire.