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Americans are finally tapping the brakes when it comes to buying new vehicles, according to analysis of first-quarter sales by J.D. Power.
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The firm, which analyzed data from automakers and dealers in the first three months of year, estimates the annual sales rate during the first quarter was 16.7 million vehicles in the U.S.
Depending on the final numbers reported by automakers later this week, the pace of sales during the first quarter could be lowest since the fourth quarter of 2014, when the research firm Autodata calculated a sales rate of 16.69 million vehicles.
“I think we’re starting to see a slowdown,” said Dave Habiger, CEO of J.D. Power. “That said, the consumer remains strong.”
Most executives in the auto industry have predicted 2019 will be the first year since 2014 when annual sales in the U.S. fall below 17 million vehicles. Factors including the number of new vehicles sold in recent years, higher interest rates and higher monthly auto loan payments are expected to prompt some potential buyers to rethink their plans.
But J.D. Power says the end of “peak auto” doesn’t mean sales and profits will plunge for automakers. In fact, its data shows the shift from less profitable cars to far more expensive SUVs and pickups, a transition that will help ease the impact of overall sales cooling off.
In the first quarter, 48 percent of the new vehicles sold were utility vehicles — pickups, SUVs and crossover utility vehicles, an increase of 2 percent from a year earlier. In addition, the average revenue per utility vehicle collected by automakers in the first quarter climbed $800 to $33,100 according to J.D. Power. The firm’s analysis found the average revenue per pickup truck sold in the first quarter jumped $1,200 to $41,500 over the same time last year.
While retail sales of new vehicles fell in the first quarter, used auto sales at franchise auto dealers continued to climb, increasing 5.3 percent from the first three months of 2018.
Most automakers will announce their March and first-quarter sales Tuesday, giving investors a critical data point as they start the second quarter.
The continued demand for crossover utility vehicles, SUVs and pickups, along with the rising transaction prices, convinces Habiger that auto sales remain relatively strong. “There’s more confidence in 2019 than the numbers suggest,” he said.