When the Dow plunged 611 points on June 24, the day after U.K. voters chose to break from the European Union, the big question was whether Brexit would crush the British, European and U.S. auto markets.
But after June U.S. auto sales rose 2.4 percent, analysts couldn’t spot a dent on this side of the Atlantic.
“No effect,” said TrueCar analyst Patrick Min.
“I didn’t see much Brexit impact,” said Mark Wakefield, head of the automotive practice at AlixPartners.
Well, if I stare into the tea leaves long enough, I notice that most forecasters had predicted June gains in the 4 to 5 percent range, a touch higher than the actual result. But most forecasts were, as usual, based on sales in the first 15 to 20 days of the month.
And financial markets affect shopping habits -- car buyers can get spooked when their pension funds tank. So there’s an unanticipated big correction on the last Friday of the month and it’s hard to spot a difference?
Hey, time for champagne, not crying towels. This is one hardy U.S. market.
There almost certainly will be some pain in U.K. and European markets. However negotiations over the next two years of disengagement proceed, the U.K.’s plan to unwind from a half century of what grew from a six-country Common Market into a 28-member political and economic union will depress auto sales. This week, IHS Automotive estimated a million units of lost auto sales in Europe between now and 2018. Today, citing the post-Brexit landscape, IHS forecast slower growth in global auto production during those years, with 2018 world output at 94.6 million instead of its previous 95.8 million target.
But IHS is sticking with its 2016 U.S. sales forecast of 17.68 million, a 1 percent gain from the record 2015 level.
How resilient is the U.S. market?
Most forecasters today stuck with their full-year forecasts, which includes TrueCar.com at 18 million and AlixPartners at 17.75 million. Last week, before the U.K. referendum, RBC Capital Markets flipped from predicting 2016 U.S. sales would top last year’s record to forecasting a 1 percent drop. Bank of America Merrill Lynch lopped its estimate by a half million vehicles.
But some analysts even see potential silver linings in the Brexit turmoil.
General Motors says low auto loan interest rates may linger longer -- because after the Brexit uncertainty, the Federal Reserve is less likely to raise rates as previously planned.
And AlixPartners’ Wakefield sees a potential bump in the luxury side of the U.S. market if European luxury brands start diverting more vehicles here in anticipation of a European sales slump. “They have the capacity to do that,” he said.
Obviously, neither of those developments is certain. But after the first half of the year, U.S. sales are running 1.4 percent ahead of last year’s record-setting pace.
It looks like the industrywide race to establish a new U.S. sales record in 2016, topping 2015's tally, will come right down to the wire.
At the halfway point, we have some close races among brands and automakers too:
- Fiat Chrysler Automobiles (including Maserati) missed outselling Toyota Motor Sales in June by 243 units, 198,257 to 198,014. TMS’ half-year lead is just 40,342 units.
- Nissan North America outsold American Honda by 1,838 units, expanding its first-half lead to almost 6,000, 798,114 to 792,388.
- They aren’t natural competitors, but Lexus outsold Volkswagen brand in both June -- 25,779 to 23,809 -- and the first half, 151,564 to 149,014.