Sales of new vehicles in the United States are expected to fall this month but prices and dealer profits remain high.

A joint forecast from J.D. Power and LMC Automotive suggests that retail sales of new vehicles this month are expected to reach 988,400 units, a 10.8 per cent decrease compared with July 2021 and accounting for there being one less selling day than the same month last year. Furthermore, total new-vehicle sales for July 2022 are expected to top out at 1,159,700 units, representing a 5.7 per cent decrease from July 2021.

“July is yet another month where supply constraints keep vehicle sales artificially low but deliver record transaction prices and dealer profitability,” J.D. Power’s president of its data and analytics division, Thomas King, described. “July 2022 is on track to be the ninth consecutive month that retail inventory closes below 900,000 units as anticipated improvements in vehicle production volumes fail to materialize.”

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Data from J.D. Power reveals that 55 per cent of vehicles sold in the U.S. this month will be sold within 10 days of arriving at a dealership. The average number of days that a new vehicle is in a dealer’s possession before being sold is also on pace to fall to 19 days, down from 29 days just 12 months ago.

Consumers are expected to have spent nearly $45.3 billion on new vehicles, which would be the second-highest level for the month of July but down 3.5 per cent from July 2021.

A lack of inventory has seen car manufacturers reduce discounts of new vehicles. The average incentive spend per vehicle is tracking towards $894, J.D. Power reveals, a decrease of 54.7 per cent from a year ago and marking the third consecutive month under $1,000 and the first time under $900.

While consumers are feeling the pinch, dealerships are enjoying record profit levels.

“Total retailer profit per unit – inclusive of grosses and finance and insurance income – is on pace to reach a monthly record of $5,023, an increase of $815 from a year ago,” King said. “Nine of the past 10 months have seen retailer profit per unit at or above $5,000. This elevated per-unit profit level is more than offsetting the drop in sales volume as total aggregate retailer profits from new-vehicle sales for the month of July is projected to be up 2.5% from July 2021, reaching $5.0 billion, the best July ever and the fourth-highest amount of any month on record.”