U.S. auto retail sales expected to fall in December as prices soar

The Reuters- U.S. auto retail sales are expected to fall in December, as supply shortages and high demand have caused prices to skyrocket, according to consultants J.D. Power and LMC Automotive released a report on Thursday.

Retail sales of new vehicles could fall 17.7% to 2,923, 600 units from a year ago, the report said.

Thomas King, president of the data and analytics division at J.D., said intense demand with limited supply is causing prices to increase. Inflationary pressure is on auto manufacturers of all sizes over the past three decades due to a rise in raw materials prices.

Average transaction prices are expected to reach $45,743, going above the $45,000 mark for the first time, and 20% higher than December 2020, when prices first breached the $38,000 level.

Production at auto plants increased by 2.2% last month after advancing 10.1% in October. The November motor vehicle output was 5.4% less than the levels seen in the same period last year because of a global shortage of semiconductors.

Retail and non-retail transactions are projected to reach 1,245, 600 units, a 20.5% decrease from last year.

Jeff Schuster, president, Americas operations and global vehicle forecasts, said that a mild improvement in chip shortage may be overshadowed by the surge in Omicron variant COVID 19 cases.

The average new-vehicle retail transaction price in December is expected to reach $45,743. The previous high was in November at $44,515.

The seasonally adjusted annualized rate for total new-vehicle sales is expected to be 13 million units, down 3.5 million units from 2020.

The consultants predict that global light vehicle sales will increase to 86 million units by 2022, an increase of 750,000 units from last month.