U.S. new light-vehicle sales are forecast to rise slightly in July, helped by an extra weekend and sharply higher discounts from some automakers, amid more warnings the market is leveling off.
Demand for new cars and light trucks is expected to rise about 0.45 percent in July, compared with a year ago, based on the estimates of four forecasts released this week.
Edmunds is projecting a slight gain of 0.8 percent in July new-vehicle deliveries, while TrueCar estimates sales will slip 0.4 percent and Kelley Blue Book expects volume to drop 1 percent. LMC Automotive is more optimistic, forecasting a 2.4 percent rise based on the first 19 selling days of the month and an extra weekend of sales compared with July 2015.
The mixed forecasts are the latest signal the U.S. auto market is peaking after a record six straight years of growth following the 2008-09 downturn.
AutoNation CEO Mike Jackson, in an appearance today on CNBC, said the U.S. auto industry is plateauing at a high level but added the availability of credit is “terrific” and loan default rates are “still minuscule compared to historic levels.”
Automakers are scheduled to release July sales results on Tuesday, Aug. 2.
The four largest automakers, on average, will see little change in July sales compared with a year ago, according to forecasts tracked by Reuters, which see General Motors down 1.3 percent, Ford off 1 percent, Toyota down 2.7 percent and Fiat Chrysler Automobiles up 1 percent, based on the company’s recently revised results from July 2015.
TrueCar, citing “soft spots in consumer demand,” estimates that U.S. retail deliveries, excluding fleet shipments, will decline 0.7 percent to 1,318,200 this month.
“An exceptionally hot July has tempered retail sales with some consumers electing to stay indoors and off dealership showrooms,” said Oliver Strauss, TrueCar’s chief economist and forecaster.
Edmunds expects the seasonally adjusted annual rate of sales for July to come in at 17.8 million light vehicles, while TrueCar pegs the SAAR this month at 17.7 million. Kelley Blue Book sees the SAAR for July at 17.5 million, and LMC is forecasting a SAAR of 18.1 million.
After topping 18 million in September, October and November 2015, the SAAR has fallen back to average 17.2 million a month, though it slipped to 16.68 million in June.
U.S. light-vehicle sales grew 1.4 percent in the first half of the year, though retail demand was even weaker, and analysts have trimmed their forecasts for all of 2016, dimming prospects the industry can top 2015’s record tally of 17.47 million new cars and light trucks.
Ford Motor Co. on Thursday joined analysts who are growing more skeptical that the record set last year will be topped in 2016. Consumer demand has gone slack, forcing some automakers to hike incentives to lure buyers to showrooms. The average discount jumped 13 percent to $3,102 in the first half of the year, far outpacing the rate of growth in vehicle sales, according to Autodata Corp.
In July, incentive spending is averaging an estimated $3,225 per vehicle, up 5.2 percent from a year ago but down 0.2 percent from June 2016, TrueCar estimates. Among major automakers, average incentives this month rose the most at BMW (up 25 percent), Ford (up 20 percent) and FCA US (up 13 percent) over July 2015, TrueCar said.
General Motors also increased incentive spending this month, with the average deal per vehicle climbing to nearly $4,000, Kelley Blue Book estimates. LMC estimates average U.S. incentives reached a 2016 high of $3,680 per vehicle in July.
LMC said Friday it expects 17.4 million new vehicles will be sold in the U.S. in 2016, down 0.1 percent, or 15,000 units, from 2015.
“This is proving to be a dynamic year in terms of automotive demand volatility. The environment influencing volume remains variable as well, with continued low interest rates and higher incentives helping demand,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “This will be a historic year for U.S. autos, with 2016 either being the first decline since 2009 or a record sales year that nudges past 2015 -- it is that close at this stage and could go either way.”
Standard & Poor’s this month cut its U.S. forecast for 2016 auto sales to 17.5 million from 17.8 million, reflecting the impact of the U.K.’s decision to leave the European Union on the U.S. economy, slowing retail demand for new vehicles and softness in used-car prices.
Still, other analysts expect favorable economic conditions, low gasoline prices and steady job growth to continue to support higher volumes the rest of the year.
“Last year’s record-setting sales performance was powered primarily by a strong second half, and July sales suggest that 2016 is poised to play out in the same way,” said Edmunds.com analyst Jessica Caldwell.
“With low interest rates and a leasing market that’s stronger than ever, automakers have a great opportunity to build on last year’s burst of summer sales. The growth might not be as significant as in recent years, but it’s still growth nonetheless.”
Reuters contributed to this report.