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Automakers Brace for September Sales Slide

But industry is still running ahead of early-2013 forecasts.

by on Sep.27, 2013

By a fluke of the calendar, Labor Day sales wound up in the August column this year.

Are the cool days of autumn coming faster than anticipated? Preliminary numbers suggest that the automotive sales boom, at least, is cooling down after a torrid summer that took almost everyone by surprise.

Though the industry won’t release final numbers until next week, the sales pace has clearly slowed during September, according to reports from both manufacturers and analysts alike. The seasonally adjusted annual rate of sales, or SAAR, is projected to fall from a hot 16.1 million units in August to something closer to 15.2 million this month.

The Last Word!

“September 2013 new-vehicle sales represent the first year-over-year drop since May 2011, due to slower retail sales, two fewer sales days in the month, and this year’s Labor Day sales included in August 2013 totals,” said Alec Gutierrez, senior analyst at Kelley Blue Book.

On the positive side, the summer surge means that 2013 is still likely to be the industry’s best year since before the nation’s economy collapsed – and sales seem on track to surpass the forecasts most experts made early in 2013 which called for volume to slide somewhere between 15.0 and 15.5 million.

“Despite the cool down this month,” forecast Gutierrez, “sales will remain on track to exceed 15.6 million units in 2013 because of strong product introductions from automakers.”

That’s in line with projections by both J.D. Power and Associates and LMC Automotive, their joint forecast data indicating September slowed slightly from the industry’s sprint of recent months. Even so, the industry won’t go into the red on a retail level.  Excluding fleet numbers, Power and LMC projected a 2% increase over September 2012.  Total light-vehicle sales in September are expected to rise 4%.

(August car sales show unexpected summer heat. Click Here for the complete story.)

“Although the year-over-year sales gain in September is smaller than has been observed in recent months, it’s important to recognize that September sales are being heavily influenced by a quirk on the industry sales calendar,” said John Humphrey, senior vice president of the global automotive practice at J.D. Power.

Whether the slowdown marks a shift in the market or just a temporary aberration in the automotive recovery remains to be seen.  In an interview with the Associated Press, Jim Lentz, Toyota’s North American CEO, warned that so-called pent-up demand from buyers who postponed purchases during the worst of the Great Recession could begin to dry up in 2014, especially if the economy doesn’t improve at a more rapid pace.

“The market then has to work off a much better economy, an improving economy,” Lentz said. “If we don’t have that, I think the market may flatten out.”

For now, there still seems to be plenty of pent-up demand, industry analysts believe, though the uncertainties of the economy – especially with a possible government shutdown looming – could have a big impact on sales in the months to come.

September’s numbers could show big gains by some makers and weak performance by others.  Several manufacturers, among them Hyundai, Kia, General Motors, Ford Motor Co. and Chrysler Group, are reporting shortages of some vehicles despite the steady increase in production in North America.

(Mazda struggling with shortages of several key models. Click Here for more.)

Nonetheless, “September is a tough month,” complained Chris Perry, vice president of marketing for GM’s Chevrolet Division.

“September has been more difficult than August and the industry could well be flat. It seems to have leveled out,” echoed Reid Bigland, head of sales at Chrysler Group, which has 41-month string of sales increase on the line in September.

The month’s numbers will likely lead to a lot of debate due to several calendar quirks.  For one thing, Labor Day normally is counted by the industry in September; however, in 2013, it fell into August for a reporting purpose, automatically ensuring the current month wouldn’t show the benefit of traditional holiday sales.

J.D. Power estimates that more than 248,000 new vehicles were sold during the Labor Day weekend. Had those sales been included in September LMC Automotive indicates they would have lifted the monthly SAAR and made it look like momentum was continuing to build.

“When combined, August and September retail sales are expected to be up 10.6%, compared with August and September 2012, which underscores the continued positive trajectory in growth and overall health of the industry,” Humphrey noted.

Paul A. Eisenstein contributed to this report.

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One Response to “Automakers Brace for September Sales Slide”

  1. Jorge M. says:

    Eventually they saturate the market with three new leased vehicles in every driveway. Detroit still hasn’t learned… They have this illusion that if they just keep building new models, sales will continue to increase perpetually and it’s untrue. They evidently didn’t learn much from the last “bust”?