New vehicle sales are expected to drop 1% year-over-year to a total of 1.5 million units in July 2016, resulting in an estimated 17.5 million seasonally adjusted annual rate, or SAAR, according to Kelley Blue Book.
The estimate is in line with a growing consensus that sales of new vehicles peaked during the summer and fall of 2015 and the growth of sales has flattened out in recent months. However, the competition for those sales has intensified as the recent furor General Motors use of incentive “increases” revealed.
Chuck Stevens, GM’s chief financial officer, said the discounts GM offered over the Fourth of July was a “tactic” and not a signal that GM was preparing to make broader use of incentives.
Following a weaker-than-anticipated sales month in June, Kelley Blue Book expects new-car sales to bounce back to the mid-17 million SAAR range in July, helped by a strong Fourth of July weekend, increased incentives and continued growth in leasing. Sales in the first half of the year totaled 8.6 million units, which was the highest first-half volume since 2001.
“The new-car market currently appears to be reaching its peak in terms of sales, and now there is a better chance that 2016 won’t be another record year, as year-over-year comparisons for the remainder of 2016 will be tough,” said Tim Fleming, analyst for Kelley Blue Book.
(Wyoming the most expensive state to own a car. For more, Click Here.)
“After a record new-car sales total in the United States in 2015, Kelley Blue Book’s full-year forecast for 2016 now calls for sales in the range of 17.4 million to 17.8 million, which would range anywhere from a slight year-over-year decline to a 2% increase.”
In July 2016, new light-vehicle sales, including fleet, are expected to hit 1.5 million units, down 1% from July 2015 and down 1% from June 2016. The seasonally adjusted annual rate SAAR for July 2016 is estimated to be 17.5 million, which is even with July 2015 and up from 16.6 million in June 2016, according to KBB’s analysts.
Retail sales are expected to account for 84% of volume in July 2016, down from 84.4% in July 2015.
A WardsAuto forecast calls for U.S. light-vehicle sales to reach a 17.6 million-unit seasonally adjusted annual rate in July, following June’s 16.6 million SAAR.
(New study names customers’ “ideal vehicles.” Click Here to see why Tesla, GMC, Volvo and Subaru come out on top.)
General Motors sales are expected to slide 4%, which is likely to be one of the biggest volume declines of the major manufacturers in July. Much of the monthly decline can be attributed to a drop in rental sales, as GM continues to focuses on increasing retail share. However, to drive new sales, GM also has increased incentive spending, with the average climbing to nearly $4,000 per unit, according to KBB.
Nissan North America could gain the most market share in July, with a projected 4 percent increase in volume, due to strong months from the Frontier and Rogue. The Frontier is benefitting from being in the hot midsize pickup segment, while the Rogue could surpass the Altima as Nissan’s top seller in July.
Analysts, however, suggested that Nissan is paying a price for gains with larger incentives, analysts said this week.
Fiat Chrysler Automobiles N.V. is grappling with a growing scandal over inflated sales totals that is creating uncertainty around its sales figures both in the past and in the future. FCA acknowledged this week that its eye catching string of 75 monthly sales increase actually came to an end three years ago.
(High-tech safety features “APEAL” to consumers, says J.D. Power study. For more, Click Here.)
Meanwhile, Ford, like General Motors, expect another strong year of results, and Ford committed to full year guidance of company pre-tax profit and operating margin equal to or better than last year; however, company now sees risks challenging achieving guidance.