Monthly U.S. auto sales are expected to fall for the first time in 19 months in August, but analysts say it’s a blip caused by a later-than-usual Labor Day rather than a softening of consumer demand.
Still, that could be enough to halt Fiat Chrysler Automobiles’ streak of consecutive year-over-year gains after 64 months. Kelley Blue Book projects that FCA’s sales will decline 3.2 percent, while TrueCar, Edmunds.com and Barclays Capital think the streak will continue -- barely.
Overall, LMC Automotive and KBB are forecasting a 4 percent year-over-year U.S. sales decline for August. TrueCar, Edmunds and Barclays estimate that sales will slide about 3 percent from August 2014.
Yet the seasonally adjusted annualized selling rate could wind up being about the same as, or maybe slightly higher than, a year ago. That’s because the industry’s biggest holiday weekend counts toward September’s results this time around, whereas it’s been part of August for the past three years.
Last year, 20 percent of August sales occurred over the three-day holiday weekend, J.D. Power said.
“There certainly is no cause for alarm,” John Humphrey, the senior vice president of J.D. Power’s global automotive practice, said in a statement. “Our expectation is that with Labor Day falling in September, sales that would have occurred this month are being pushed into next month. If that happens, September will move sales back to the strong trend that we’ve been seeing throughout the year.”
In addition to missing Labor Day, this August has one fewer selling day than a year ago. August 2014 had last year’s highest selling rate: 17.3 million, which was an eight-year high at the time.
SAAR forecasts for this month range from 17.2 million to 17.4 million, which are roughly in line with where total sales for the year are likely to end up.
“Despite the tough comparison with last August, robust demand for crossovers and pickup trucks continues this month and the industry is right on plan to hit our revised 17.2 million-unit projection for 2015,” Eric Lyman, TrueCar’s vice president of industry insights, said in a statement. “Last August was a very strong month, with a built-in sales bump from Labor Day. With the Labor Day delay, we anticipate a lot of buying activity in September.”
Labor Day weekend has become a critical selling period because the holiday aligns with clearance sales on outgoing models and the arrival of vehicles from the new model year.
August sales also may have suffered from several grim days for the stock market in the past week, just as dealers are scrambling to hit their end-of-month sales goals. Analysts say the volatility could cause consumers to put off making big purchases, at least until the markets settle down and they regain confidence that it’s a good time to spend money.
So far, observers say the effect on auto sales has been minimal, given low unemployment and interest rates. The markets rebounded Wednesday and were continuing that trend today, though the Dow Jones Industrial Average is still down about 7 percent for the month.
“The selling rate remains well above 17 million units,” Jeff Schuster, senior vice president of forecasting at LMC Automotive, said in a statement. “Upside potential for the U.S. auto market is gaining momentum, as it now looks unlikely there will be an interest rate increase in September, and a delay in rising rates will most certainly assist in keeping growth on track.”
LMC said it has raised its full-year forecast for retail sales by 100,000 units to 14 million units. Its forecast for total sales is unchanged at 17.1 million.
Four forecasts show sales declining at least 9.9 percent this month for Toyota Motor Sales U.S.A., as demand for fuel-efficient cars continues to wane. American Honda also is widely projected to lose market share.
In contrast, Ford Motor Co. may post flat or slightly higher sales, now that inventories of its redesigned F-150 pickup are nearly back to normal levels. The forecasts show General Motors sales coming in flat or slightly lower than a year ago.
GM has said it expects a decline in deliveries to rental-car companies this month of 15,000 to 17,000 units, which means its retail sales would need to rise about 8 percent just to come out even with August 2014.
Barclays analyst Brian Johnson said competition in the full-size pickup segment is intensifying, with incentive spending, as of mid-month, up 13 percent from a year ago and 5 percent from July. F-series and Ram incentives are at their highest levels in at least four years, he said in a report today.
But at the same time, transaction prices for full-size pickups are up 4.6 percent, Johnson wrote.
Transaction prices for all vehicles are up 1.9 percent, or a little more than $500, according to J.D. Power data. If that trend continues, J.D. Power said retail spending on new vehicles this month would reach $39 billion, the fourth-highest total on record.