Sales rate to top 16 million for 6th month in a row, analysts predict
August is traditionally a strong month for U.S. sales because consumers expect factory discounts at the end of the model year.
DETROIT -- U.S. auto sales volume is expected to keep rolling along in August, with two independent forecasters predicting a sixth straight month of 16 million-plus selling rates.
TrueCar.com predicts a seasonally adjusted annual selling rate of 16.6 million for August and LMC Automotive/J.D. Power is just behind at 16.5 million. Both expect 1.5 million light vehicles to be sold, equaling a strong August a year ago despite one fewer selling day this year. The August 2013 SAAR was 15.9 million.
“We remain upbeat about auto industry sales, segment mix and profitability,” said TrueCar President John Krafcik, noting August incentives climbed an estimated 9.3 percent.
“Incentive spending changes reflect consumer demand shifting to higher-MSRP, higher-profit vehicle segments, which is a net positive for most full-line automakers,” he said.
John Humphrey, head of the global auto practice at Power, expects August spending on new vehicles to reach almost $39 billion. That would be the second-highest revenue for any month on record, trailing only $39.7 billion spent in July 2005.
“The record consumer spending is fueled by both high sales volumes and high transaction prices,” he said.
But not all automakers are expected to prosper in August.
Both forecasters expect substantial sales and market share declines for Volkswagen Group and American Honda. Conversely, they predict gains for Chrysler Group, Nissan North America and the Hyundai.
For Chrysler, August will likely be its 53rd consecutive month year-over-year U.S. sales gains.
August is traditionally a strong month for U.S. auto sales because consumers expect factory discounts at the end of the model year.
And like last year, the industry’s August sales period will capture the entire Labor Day weekend, effectively pulling some normal September volume forward into the August count.
August will likely be a strong retail month. LMC/Power forecasts the retail selling rate at 13.6 million, the sixth straight monthly SAAR above 13 million and the highest this year except for May’s 14.1 million.
Both forecasting companies expect low fleet sales in August. The month traditionally is a slack month with numbers below the annual mix of 18 to 20 percent of total U.S. sales.
LMC/Power expects fleet volume of 162,000 units, an 11 percent mix that it calls consistent with last year. TrueCar forecasts a fleet mix of 11.9 percent, up from 10 percent from last August.
Looking ahead, both companies reiterated their full-year sales forecasts: 16.3 million light vehicles for LMC/Power, 16.4 million for TrueCar. Automakers sold 15.6 million units in 2013.
“As a very robust summer selling season winds down, optimism continues for the remainder of 2014,” said Jeff Schuster, head of auto forecasting for LMC Automotive.
He also expects continued sales growth in 2015, noting that the bulk of the downside risk next year comes from external factors such as global conflicts and capital flight from emerging markets.
You can reach Jesse Snyder at firstname.lastname@example.org.