Forecasters expect August U.S. new-vehicle sales to get a jolt from Labor Day weekend traffic as incentives rise and interest rates dip moderately. It could be the second year-over-year increase in a row after July's estimated 1.2 percent gain, but actual numbers that include the Detroit 3 won't be known until quarterly results are reported on Oct. 1.
The key holiday weekend lands in the August reporting period this year instead of September as it did in 2018. August also features five weekends, a key driver of showroom traffic and sales.
J.D. Power/LMC, ALG, Cox Automotive and Edmunds are projecting seasonally adjusted, annualized sales rates ranging from 16.5 million to 16.8 million, in line with July's 16.82 million pace and down from 17.01 million in August 2018.
Monthly sales fell in the first six months of the year and are down an estimated 1.9 percent through July.
Thomas King, senior vice president of J.D. Power's data and analytics division, believes August will be a "blockbuster" month for the industry. He said sales are expected to post the largest year-over-year gain since December 2016. Rising manufacturer incentives are contributing to August's anticipated strong results, King said, but he added that the sales reporting calendar is the primary reason behind the expected gains.
"Labor Day is one of the most heavily shopped periods of the year, with consumers motivated by heavy discounts on outgoing model-year vehicles and new 2020 model-year vehicles arriving in showrooms," King said in a statement. "Last year, more than 237,000 vehicles were sold during the Friday-Monday holiday period."
King said the strong volumes in tandem with higher average sales prices means "consumers will spend more purchasing new vehicles in August than any month in history."
J.D. Power says consumers are expected to spend a record $46.8 billion on new vehicles this month, which would be $598 million more than the previous high set in December 2018.
Transaction prices for new vehicles will jump 4 percent to $33,322, an August record, Power predicted, and consumers will spend an average of $26,781 on cars and $35,696 on trucks and utility vehicles.
ALG, the TrueCar subsidiary, projects incentive spending to creep up to $3,825, a 1.2 percent increase from the year-earlier period.
"Consumers continue to shake off the political and trade turbulence because the economy remains on solid, if somewhat slowing, footing," Jeff Schuster, LMC Automotive's president of Americas operations and global vehicle forecasts, said in a statement. "This foundation, combined with higher fleet volume in the first half of the year, will keep the industry above 17 million units for a fifth year in a row."
Cox Automotive's 16.5 million SAAR projection is lower than those of the other forecasters. While Cox said strong consumer confidence and employment gains continue to provide stable demand for light vehicles, the company revealed that both measures are showing some weakness.
Cox said job creation has slowed since last year and consumer confidence, while still elevated, is down from earlier in the year. Cox believes affordability is weighing on the new-vehicle market as rising vehicle prices and elevated interest rates keep monthly payments out of reach for many potential buyers.