CARY, N.C. -

Cox Automotive, Edmunds, J.D. Power and TrueCar all tried to sort through the static created by new- and used-vehicle supply constraints and rising prices to offer sales and other predictions for September, which closes on Thursday.

For dealers that do have plentiful used and new models to retail, perhaps this comment from Edmunds senior manager of insights Ivan Drury directed at consumers will help store managers and salespeople reach their monthly sales goals.

“Don’t wait as the situation could get worse, and don’t try to pit dealers against one another for the best price: You’ll more than likely end up empty-handed because there will likely be plenty of other shoppers vying for the same vehicle,” Drury said in a news release.

If that vehicle happens to be used, it could be part of the 3.6 million used-vehicle sales expected to be completed in September. That’s the projection from TrueCar, which noted that should the industry generate that sale figure, it would represent a 3% rise year-over-year but a 2% dip from August.

KAR Global chief economist Tom Kontos recapped August used-sales data in his latest Kontos Kommentary, which was released on Wednesday and explored used-vehicle prices and supply.

Kontos cited data from the National Automobile Dealers Association that indicated retail used-vehicle sales by franchised and independent dealers in August softened 2.2% month-over-month and 2.8% year-over-year.

Kontos added that year-to-date through August, sales are up 12.5% versus 2020 and 1.6% compared to 2019/pre-pandemic levels.

Drury’s recommendation came in connection with leaseholders who are near their end of their term for what might be valuable vehicle, especially for stores thirsty for certified pre-owned inventory. Consider what ALG vice president Eric Lyman shared in another news release from J.D. Power.

“ALG has updated its forecast for 3-year-old retention values to reflect continued production constraints and the resulting decline in used-vehicle supply that will affect values until the middle of the decade,” Lyman said. “Late-model-year vehicles will continue to see elevated values throughout 2022 calendar year, when returning leases on 2019 model-year vehicles are expected to retain a staggering 60.6% of their original MSRP, with continued used supply constraints alone contributing a full seven points to vehicle retention next year.

“While this is down from the 65.0% retention experienced for 2018 model-year vehicles in 2021, these unprecedented values will continue to disrupt the traditional off-lease remarketing environment with lessees and dealers intercepting vehicles at lease maturity before they can be sent to traditional wholesale auctions and upstream sales channels,” he continued.

“Looking further out into the future, ALG expects 3-year-old vehicles returning in 2024 calendar year to drop to 53.7% of original MSRP. While these values may seem low compared with current market performance, they still represent a residual value forecast 4.0 percentage points higher than the five-year pre-pandemic average experienced from 2015-2019,” Lyman went on to say.

Whether the dealership is retailing a certified vehicle fresh off of a lease or an older, high-mileage model, TrueCar also projected that the average interest rate on used vehicles financed and delivered in September is expected to be 7.3%.

Profit dealers might generate in their F&I departments could help offset what managers are having to spend on getting the used inventory. Jonathan Banks — vice president of J.D. Power Valuations Services and one of the more than 140 experts and executives on deck to appear at Used Car Week beginning on Nov. 15 in Las Vegas — shared what he’s seeing on the wholesale-price front.

“After cooling briefly in late June and July, used prices have once again started to heat up as the market moves into the fall season,” Banks said. “This is typically the time of year where the market softens, however, ongoing production challenges on the new side of the industry are helping keep used prices at historic levels. Used prices increased each week in August and have continued to climb in September.

“So far, through the first half of the month, prices have risen by an average of 4%. The latest growth pushes wholesale prices up approximately 31% above September 2020. As the global semiconductor shortage lingers, a certain degree of volatility in used prices should be expected. However, used vehicles will remain in high demand,” Banks went on to say.

New-vehicle sales expectations

The ongoing chip shortage impacted all four new-model sales forecasts for September that Auto Remarketing received.

According to a forecast from Cox Automotive, the pace of new-car sales, or seasonally adjusted annual rate (SAAR), is expected to finish near 12.1 million, the slowest pace since May 2020, when much of the country was closed during the first wave of the COVID-19 pandemic.

Cox Automotive said the September sales pace will be down from August's 13.1 million pace and down from the September 2020 pace of 16.3 million.

“After a strong spring selling season, the supply situation has worsened precipitously and is dragging sales down with it,” Cox Automotive senior economist Charlie Chesbrough said in another news release. “The monthly declines have been large — the sales pace has declined by more than a million units in each of the past five months. Available supply on dealer lots is now 58% lower than last September, down nearly 1.4 million units."

Meanwhile, according to a joint forecast from J.D. Power and LMC Automotive, retail sales of new vehicles this month are expected to reach 888,900 units, a 24.8% decrease compared with September 2020, and a 19.8% decrease compared with September 2019 when adjusted for selling days.

“September results show that there are simply not enough vehicles available to meet consumer demand. Similar to August, inventory levels have been depleted to the extent that new-vehicle sales are being dictated by how many vehicles are being delivered to dealerships each month,” said Thomas King, president of the data and analytics division at J.D. Power.

“The mismatch between strong consumer demand and constrained inventory is leading to higher vehicle prices,” King continued. “Looking forward to October, with inventory and production levels at historical lows, dealers are turning vehicles on lots almost as soon they arrive and, as demand continues to exceed production, the overall industry sales pace will continue to be supply constrained.”

Edmunds mentioned future manufacturing capacity when it projected that 3,416,266 new cars and trucks will be sold in the U.S. in the third quarter, which reflects a 13% decrease from the third quarter of 2020 and a 22.7% decrease compared to the second quarter of 2021.

“New-vehicle sales in the third quarter have been a direct reflection of the worsening chipset and inventory situation. Although consumer demand continues to run high, sales have continued to slide downward each month because there simply aren’t enough of the vehicles that shoppers want,” Edmunds executive director of insights Jessica Caldwell said.

“The entire U.S. auto industry — including the Asian manufacturers, which were doing a bit better than their domestic counterparts until recently — is in an incredibly volatile position right now and we are seeing inflated retail prices across the board,” Caldwell continued. “It’s growing extraordinarily hard to predict who will come out on top heading into the rest of the year, as every automaker is at the mercy of its suppliers and challenged logistics around the globe.”

Finally, TrueCar is expecting total new vehicle sales will reach 1,007,396 units in September, which would be down 25% from a year ago and down 8% versus August when adjusted for the same number of selling days

“We are starting to see things settle into an equilibrium from a day’s supply standpoint. While new vehicle inventory continues to decline, we're also seeing sales drop at a similar rate,” said Nick Woolard, lead industry analyst at TrueCar. “But low sales do not equate to low demand. Paired with strong demand, low supply continues the trend we have seen since January of declining incentives and higher prices."

TrueCar senior vice president of OEM solutions Valeri Tompkins added, “As the industry continues facing chip shortages, it's no surprise that most OEMs are seeing a decline in sales. GM in particular is showing its lowest sales since the start of COVID-19.”