It’s hard to believe sedans and passenger cars in general were once big business in the US. A massive shift has been underway for years now as buyers opt for more utility, cargo space and high-riding machines. In other words, pickup trucks and SUVs. The latest data forecast from J.D. Power, released on Wednesday, shows the passenger car market has shrunk to new lows.
According to the forecast, 80.1% of all new vehicles sold in January 2022 will be either pickup trucks or SUVs. That leaves just under 20% of sales this month for passenger cars like the Honda Civic, Toyota Camry, Hyundai Sonata and the like. Instead, Americans are all-in on utility vehicles. Those of you that did opt for a sedan, you’re part of an ever-shrinking club.
The additional data paints a picture everyone saw coming: Inventories are low and demand remains strong for new vehicles in general. Year-over-year, the forecast expects retail sales to drop by 8.3% to 828,900. Consumers are spending record amounts on new cars, even though fewer people are buying them. Spending is set to rise by $4.4 billion to $38.2 billion total year-over-year with an average transaction price of $44,905. That price is slightly down from December, when it reached a record of $45,283, according to J.D. Power’s data. Separate data from Kelley Blue Book actually showed that average price creep closer to $50,000 last month on strong luxury vehicle sales.
The higher prices come as more dealers charge premiums over MSRP and slash incentive spending on new cars. The latest data showed incentive spending fell to just $1,319 on average, down from $3,482 this time last year. In other words, it remains a poor time to buy a new car if you’re looking for a deal.
J.D. Power expects new vehicle sales to pick up the pace as we move through 2022 and expects sales to jump by 6% over 2021. Whether consumers will still be paying over MSRP remains to be seen.