J.D. Power and LMC Automotive Predicting April Sales Will Show a 500,000 Unit Drop

While hard numbers for April auto sales won’t be available until tomorrow at the earliest, research consultancies J.D. Power and LMC Automotive have cautioned the market to expect a drop of as much as eight percent based on numbers calculated from the first 17 selling days of April. J.D. Power and LMC are jointly predicting that seasonally adjusted annualized rate for retail sales will be 13.5 million units, down 500,000 from April of last year. Retail sales are expected to come in at about 1,046,000 units, which represents a 1.3 percent drop on a selling day adjusted basis compared with April 2017.

The researchers are attributing the decline to “uncertainty and unfavorable factors,” including a volatile stock market, rising interest rates and oil prices and potential roadblocks in international trade relationships. They also cite the negative impact of current levels of consumer discounts, which can erode profit margins. The average discount was $3,698, up $187 from April 2017. Discounts on trucks and SUVs were up $426, but down $226 on passenger cars, according to Reuters.

It’s also important to remember that weak April sales are also due in part to the nature of the calendar. April 2018 had two fewer selling days than the previous April. Without an adjustment for this factor, retail sales would have shown a decline of 8.9 percent.

“Although April sales will be underwhelming, it’s important to note that both March and April results are affected by quirks in the industry sales calendar,” Thomas King, Senior Vice President of the Data and Analytics Division at J.D. Power, told PR Newswire. “March benefited from an extra weekend this year, while April sales have been negatively affected by having one less selling weekend compared to 2017. When looking at the two months combined, retail sales will be down only modestly from last year.”

Auto manufacturers including Ford Motor and Fiat Chrysler, will release their hard April U.S. sales numbers tomorrow, on May 1st, though GM announced earlier this month that it will cease releasing 30-day sales reports in favor of quarterly reports because they do not accurately reflect the marketplace.

LMC Automotive has predicted that full-year sales of light vehicles will come in at 17 million units, representing a downturn of 1.1% compared to 2017. Full-year retail sales are expected to be 13.8 million units, down 1.6% from 2017.