Auto sales continue at brisk pace

By Jesse Snyder, Crain News Service

DETROIT (Aug. 29, 2014) — U.S. auto sales volume is expected to keep rolling along in August, with two independent forecasters predicting a sixth straight month of 16 million-plus selling rates.

TrueCar.com predicts a seasonally adjusted annual selling rate of 16.6 million for August, and LMC Automotive/J.D. Power is just behind at 16.5 million. Both expect 1.5 million light vehicles to be sold, equaling a strong August a year ago despite one less selling day this year. The August 2013 SAAR was 15.9 million.

“We remain upbeat about auto industry sales, segment mix and profitability,” said TrueCar President John Krafcik, noting August incentives climbed an estimated 9.3 percent.

“Incentive spending changes reflect consumer demand shifting to higher-MSRP, higher-profit vehicle segments, which is a net positive for most full-line auto makers,” he said.

John Humphrey, head of the global auto practice at Power, expects August spending on new vehicles to reach almost $39 billion. That would be the second-highest revenue for any month on record, trailing only $39.7 billion spent in July 2005.

“The record consumer spending is fueled by both high sales volumes and high transaction prices,” he said.

Winners, losers

But not all auto makers are expected to prosper in August.

Both forecasters expect substantial sales and market share declines for Volkswagen Group and American Honda Motor Co. Conversely, they predict gains for Chrysler Group L.L.C., Nissan North America Inc. and Hyundai Motor Co.

For Chrysler, August likely will be its 53rd consecutive month of year-over-year U.S. sales gains.

August is traditionally a strong month for U.S. auto sales because consumers expect factory discounts at the end of the model year.

And like last year, the industry's August sales period will capture the entire Labor Day weekend, effectively pulling some normal September volume forward into the August count.

August likely will be a strong retail month. LMC/Power forecasts the retail selling rate at 13.6 million, the sixth straight monthly SAAR above 13 million and the highest this year except for May's 14.1 million.

Low fleet

Both forecasting companies expect low fleet sales in August. The month traditionally is a slack month with numbers below the annual mix of 18 to 20 percent of total U.S. sales.

LMC/Power expects fleet volume of 162,000 units, an 11-percent mix that it calls consistent with last year. TrueCar forecasts a fleet mix of 11.9 percent, up from 10 percent from last August.

Looking ahead, both companies reiterated their full-year sales forecasts: 16.3 million light vehicles for LMC/Power, 16.4 million for TrueCar. Auto makers sold 15.6 million units in 2013.

“As a very robust summer selling season winds down, optimism continues for the remainder of 2014,” said Jeff Schuster, head of auto forecasting for LMC Automotive.

He also expects continued sales growth in 2015, noting that the bulk of the downside risk next year comes from external factors such as global conflicts and capital flight from emerging markets.

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This story appeared on autonews.com, the website of Automotive News, a Detroit-based sister publication of Tire Business.