NADA: Pulse Analysis of the U.S. Automotive Market in April 2022

The monthly "Market Beat" report released by NADA (National Automobile Dealers Association) has attracted much attention as soon as it was released as a dynamic research project that is closest to the survival of dealers. After decades of use, the "Seasonally Adjusted at Annual Rates" (Seasonally Adjusted at Annual Rates, hereinafter referred to as SAAR) method is used to show the current market environment and future trends, thereby helping dealers to plan ahead and control the sales rhythm. The research results of this project have become one of the basic reports that American auto industry manufacturers and dealers must read every month.

The International Department of the China Automobile Dealers Association will continue to provide automotive practitioners with international cutting-edge information, conduct in-depth analysis, comparison, and dismantling, and help dealers focus on the world, understand the business model of mature markets, and compare the changes and trends of the international and domestic automotive industry markets in real time.

The following is a detailed interpretation by Mr. Song Tao, Deputy Secretary-General and Director of the International Department of the China Automobile Dealers Association, of the April 2022 "Market Beat" report officially released by the National Automobile Dealers Association (hereinafter referred to as: NADA) recently.

Song Tao, Deputy Secretary-General and Director of International Department of China Automobile Dealers Association

In April 2022, U.S. dealers sold 14.3 million passenger cars at SAAR, a 6.5% increase from March 2022 and a 21.9% decrease from the same period last year. The year-on-year decrease was due to strong consumer demand released after the epidemic in April 2021 and sufficient inventory.

U.S. passenger car market pulse performance in April (Photo from NADA)

Based on past performance analysis, U.S. dealers' inventory levels at the end of April will not change much compared to 1.23 million vehicles in March, because under the special external environment, automobile manufacturers have not yet restored sufficient production capacity to meet the needs of the terminal market, and dealers do not have sufficient supply.

U.S. passenger car market pulse performance in April (Photo from NADA)

Due to the limited production capacity of automobile OEMs, many manufacturers prioritize the production of high-priced cars. According to JD Power data analysis, the average transaction price of dealers across the United States in April 2022 is expected to be US$45,232, which will set a new sales record in four months. Despite the decline in sales compared with the same period last year, sales still rose by 18.7%, just slightly lower than the historical high in December 2021.

U.S. passenger car market pulse performance in April (Photo from NADA)

In addition to changes in production structure, the reduction in sales rebates from automakers has also further increased the transaction price of bare cars. According to JD Power data analysis, the average rebate per dealer in April will drop to a historical low of $1,034.

Although the average transaction price has been rising steadily, the average monthly dealer payment is expected to be $685 in April, up 15.6% year-over-year due to increased consumer demand. However, the prepayment amount is slightly lower than the increase in transaction prices (18.7%) during the same period.

This week, the Federal Reserve is expected to raise interest rates for the second time this year, and there will be significant interest rate increases this year. Therefore, the low interest rate advantage of auto financing, which has been a driving force for auto sales in the past few years, may become a limiting factor for auto sales in the short term. The supply of vehicles will continue to hinder sales in the US passenger car market before the end of this year. According to the performance of the market pulse this month, NADA's forecast for full-year US passenger car sales in 2022 remains unchanged at 15.4 million vehicles.