The end of federal electric-vehicle tax credits has dented new-auto sales again this month as automakers rebalance their incentive strategies, J.D. Power said in its monthly forecast.
It estimated November sales are down about 5% year-over-year to nearly 1.1 million units after the end of the fleeting EV sales spike. The average transaction price is accordingly up about 2% but not enough to balance out the month’s lower deliveries.
Auto dealers’ profit per unit is essentially flat year-over-year at $2,161, J.D. Power said, while combined retailer profit will total an estimated $2.2 billion, down about 8% from a year earlier.
Average incentive spending is projected to fall about 4% year-over-year to $3,211 as EV sales slump from the highs of earlier months when consumers grabbed expiring tax credits, the data provider reported. EV sales relied on bigger incentives, including via leases, the latter category of the segment down 12%.
Consumers are finding wiggle room with a modestly lower average interest rate of about 6%, down 27 basis points year-over-year. They’re also being helped along by still-strong trade-in equity from the lingering effect of reduced new-vehicle production during the pandemic, though the average is down 1% and trade-ins with negative equity are up 3%, J.D. Power said.
“The industry enters the holiday sales season facing a mix of affordability challenges, evolving incentive strategies and lingering effects from the EV pull-ahead earlier this year,” said J.D. Power OEM solutions President Thomas King, who pointed out that leases expiring in December will be down an estimated 15%, “limiting the typical year-end boost.”
“How aggressively manufacturers choose to adjust discounting and promotional activity during December will be critical in shaping the close of 2025,” King said.
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