August is expected to mark the third month in 2016 that U.S. new-vehicle sales declined from a year ago, forecasters said, offering more evidence that the market is at or possibly past its peak.
Four forecasts issued this week call for sales to fall anywhere from 2.1 percent to more than 5 percent.
That would result in a year-to-date total roughly equal with 2015’s record pace, likely putting the industry in line for a slight full-year decline, given that 2015 concluded with the strongest fourth quarter ever.
“As we look at the remainder of the year, the industry faces an uphill struggle to match last year’s performance,” Jeff Schuster, senior vice president of forecasting at LMC Automotive, said in a statement. “With mixed economic signals, it certainly looks like U.S. auto sales may have peaked in 2015. However, it is important to focus on the sustainable high level of demand. Peak does not mean doom and gloom, and while the industry faces risk, it is not destined for a pullback.”
LMC projects sales will slide 5.2 percent in August, with a seasonally adjusted, annualized rate of 16.8 million. That would be down from a SAAR of 17.86 million in July, the highest this year, and 17.81 million in August 2015.
Barclays Capital said it expects a 3.6 percent decline in volume and a SAAR of 17.1 million. Edmunds.com projects a 2.5 percent sales decline and a SAAR of 17.2 million, while Kelley Blue Book sees volume down 2.1 percent and the SAAR at 17.3 million.
Automakers report August sales results on Thursday, Sept. 1. August has the same number of selling days as in 2015, but this year it has one fewer weekend, exacerbating the decline analysts are expecting.
Barclays analyst Brian Johnson reduced his full-year forecast to 17.3 million from his previous projection of 17.6 million. He described the market as being in an “eroding plateau,” with automakers relying slightly more on fleet deliveries and incentives as volumes begin to ebb.
Edmunds and KBB are more optimistic about the potential for 2016 to beat last year’s sales total of 17.47 million cars and light trucks. KBB said it expects sales to end up between 17.4 million and 17.8 million.
“The summer isn’t delivering explosive sales like we saw last year, but the industry is still on pace to set an annual sales record,” Jessica Caldwell, Edmunds’ executive director of industry analysis, said in a statement. “Automakers have done a good job this year of staying disciplined and managing their inventories. With volumes at record highs, they can focus even more attention on battles for market share.”
J.D. Power, which jointly develops the LMC forecast, said incentive spending in the first 17 days of August reached an average of $3,559 per vehicle, $140 more than a year ago and the highest ever for August. That’s about $200 less than the record for any month, set in December 2008.
“Softening retail sales amid low interest rates, relatively cheap gas and automakers pushing more aggressive incentives may be an indicator that further growth in this cycle will be difficult,” John Humphrey, senior vice president of J.D. Power’s global automotive practice, said in a statement. “There is opportunity for some catch-up in the all-important Labor Day selling period, but as momentum slows, the industry will need to be cautious to balance volume and margins as incentives are close to record levels.”
General Motors and Ford Motor Co. are projected to lose the most market share in August, according to the Barclays, KBB and Edmunds forecasts. They show sales falling more than 5 percent for GM and more than 6 percent for Ford. Edmunds expects Ford sales to tumble 9.8 percent into third place for the month, behind Toyota Motor Sales U.S.A.
The forecasts show sales down slightly for Toyota and up slightly for American Honda. They are mixed on the outlook for Nissan North America and Hyundai-Kia. Volkswagen Group of America is projected to continue its streak of declines for a 10th consecutive month.