U.S. sales projected to fall 6th straight month

For just the third time in a decade, the U.S. auto industry is expected to enter the summer selling season without a monthly sales gain.

Light-vehicle deliveries are predicted to decline between 1.5 and 3.3 percent this month from June 2018, according to estimates from four forecasters. That would mark the sixth straight month of declines and the third time since 2009 that the industry hasn't experienced a monthly increase during the first half of the year. It also happened in 2009, at the peak of the last economic downturn, and in 2017, with overall volume dropping in each year.

The seasonally adjusted, annualized selling rate is projected to remain healthy in June, with estimates between 17 million and 17.3 million — even as most analysts expect industry sales this year to come in below 17 million for the first time since 2014. U.S. sales dipped 2.4 percent through May, with retail demand down and fleet sales up. U.S. sales rose 5.2 percent in June 2018, one of the biggest gains of the year, and the SAAR tallied 17.32 million. There are 26 selling days this month, down from 27 in June 2018.

Automakers are scheduled to report June sales results Tuesday.

"June auto sales aren't hitting the same levels that they did last year, but they aren't dropping off a cliff, either," said Jeremy Acevedo, manager of industry analysis at Edmunds.

Hyundai/Kia and Subaru are among brands expected to post higher sales gains in June, while Nissan and Ford are forecast to see the greatest declines from a year ago.

The projected decline in volume comes as major automakers remain disciplined on incentives.

TrueCar's ALG estimates average incentive spending in June fell 1 percent from a year ago to $3,747 per vehicle. The average transaction price for a new light vehicle rose to $34,036 in June, up 3.1 percent from a year earlier, ALG said.

Automakers with the biggest jump in incentive spending, compared with a year ago, include Honda, up 12.3 percent, and Toyota, up 3.5 percent, according to ALG.

"Increased incentive spending by several automakers in June, in tandem with sustained strength in the underlying macro-economic indicators, is helping drive resilient sales for both the month and quarter," said Oliver Strauss, ALG chief economist.

Fleet shipments are expected to continue supporting overall light-vehicle sales, according to Jonathan Smoke, Cox Automotive chief economist.

While rising fleet deliveries would historically be cause for concern, Smoke said such sales are commanding higher prices with lower incentives. Automakers are no longer just "dumping" vehicles into fleets, notably rental agencies, to keep assembly plants running and to generate cash.

Corporate tax reform in late 2017 also continues to have a positive effect on commercial vehicle demand, with companies taking advantage of extra cash and accelerated depreciation schedules on equipment to upgrade or replace car and light-truck fleets.

"We think this is a 'new fleet,' a different kind of fleet," Smoke said. "The fleet buyers are spending more money on those vehicles."

Cox expects fleet sales to increase marginally in 2019 to a record 3.2 million vehicles, which would account for 19 percent of the roughly 16.9 million light vehicles projected to be sold in 2019. Fleet sales rose 6.9 percent through May.