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New Vehicle Sales Set to Drop Again in July

Subaru expected to buck trend and see sales increase.

by on Jul.27, 2017

While most automakers are expected to sell sales slip in July, Subaru is rolling right along with continual monthly increases.

New vehicle sales are expect expected to drop roughly 6% year-over-year in July as the industry continues a slow retreat that began last winter.

The seasonally adjusted annual rate or SAAR has now dropped to an estimated 16.7 million, according to Kelley Blue Book.

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“The annual selling pace is expected to remain below 17 million SAAR in July with volume dipping slightly from the levels seen in May and June 2017,” said Tim Fleming, KBB analyst. 

“We’re in the midst of the steady summer sales months when new vehicles tend to stay relatively consistent after peaking during the Memorial Day weekend in May. Kelley Blue Book expects to see sales to start to jump back up again in August and September thanks to model-year closeouts and the Labor Day holiday,” Fleming added.

(Ford posts better-than-expected second quarter. Click Here for the story.)

The sales drop in July 2017 would represent the fifth month in a row under 17 million SAAR, the longest period since a six-month streak from September 2014 through February 2015, KBB noted.

After a record year of sales in 2016 and seven consecutive year-over-year sales increases, Kelley Blue Book’s forecast for 2017 calls for sales in the range of 16.8 million to 17.3 million units, which represents a 1 to 4% decrease from last year.

In July, new light-vehicle sales, including fleet, are expected to hit 1.43 million units, down 5.7% compared to July 2016 and down 2.6% from June 2017.

KBB.com predicts that full-size trucks will see the smallest monthly decline sales among the major vehicle segments.

The retail sales are expected to account for 84.1% of volume in July 2017, slightly up from 83.8% in July 2016.

(To see more about why new car sales in the U.S. may have peaked already, Click Here.)

KBB indicated that General Motors could see the most significant drop in market share in July 2017, as the company focuses on lowering production levels to combat rising inventory. While incentive spending will likely remain elevated for GM brands, the production cuts should help to curb the increased incentives needed to move the slower-selling models that have grown in supply.

Meanwhile, Subaru is expected to buck the trend as the only major automaker expected to post a rise in overall sales volume in July. Due to one less selling day this year versus July 2016, Kelley Blue Book projects most automakers will likely see overall volume decline.

Subaru, however, will likely enjoy a modest gain in market share due to the popularity of fast-selling models, such as the Crosstrek, Outback and Impreza.

Compact sport utility vehicles are expected to stay atop the pack and will continue to gain share, while similarly priced midsize cars continue to lose share.

Kelley Blue Book expects full-size trucks post the smallest volume decline of the major segments thanks to strong demand from consumers and small businesses.

(GM earnings tumble on weakening U.S. demand. Click Here for the story.)

“New home construction, and the real estate market in general, has been steadily improving and has even surpassed pre-recession levels in some parts of the country,” said Fleming.  “A strong real estate market, especially with regard to new home construction, in conjunction with low fuel prices, generous incentives and improved product offerings will help to keep truck sales strong,” he added.

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