The pandemic car buying rebound is real as sales rocket 110%
Even with limited inventory of new cars, Americans are eager for a new set of wheels.
It wasn't hard to imagine substantially better year-over-year sales figures for April, considering much of the US shut down amid the coronavirus pandemic in 2020, but record breaking sales? That's the expectation, according to JD Power and LMC Automotive's retail sales forecast, released Wednesday, with an estimated 1,325,500 new cars sold.
April 2021 sales are expected to catapult upward by 110% year-over-year, compared to April 2020 when millions of Americans were under stay-at-home orders and numerous businesses closed their doors. In short, as we wave goodbye to this month, the retail sales figure will go down as the highest ever recorded for the month of April. However, to underscore the excellent sales month, adjusted for the number of selling days, sales are still up 26% compared to April 2019, well before the pandemic.
What makes the record number even wilder is the fact new car inventory is down substantially. Automakers first had to contend with plant shutdowns and worked double-time to make up for lost production amid the pandemic. However, the semiconductor chip shortage continues to force carmakers to idle production around the world. That's led car buyers to pay sticker price and forego traditional incentives just to go home with a new car. Dealerships, in turn, are raking in record profits. Today's estimates show total retailer profit per car sold rose to $2,697, up $1,313 from a year ago, and the average price for a new car jumped again after slumping from a high of $40,107 in December 2020. In April, it should hover around $37,572, up 6.8% from March.
The only reprieve new car buyers may find is in trade-in values. Although the pandemic lopped a chunk of value off pre-owned cars initially, values for used cars continue to soar amid tight inventories. For buyers trading in a used car toward a new car, they'll receive far more money than one year ago. As in, 128% more. The average trade-in value is up $3,087 to $5,502.
