Sales of new cars and light trucks continue maintain an upward trajectory on a month-over-month basis in September in the face of the pandemic and an increasingly sluggish economy.
However, Bank of America analysts estimated that U.S. light vehicle sales in September 2020 will decline 5.7% year over year on a selling day-adjusted basis, for a seasonally adjusted annual rate or SAAR of 15.8 million.
“Importantly, should sales come in line with our estimates, it would mark the fifth straight month of consecutive improvement in both the SAAR and year over year % growth rate since the trough in April at the height of the COVID-19 pandemic and shelter in places in the US,” Bank of America noted in its sales forecast.
However, the analysts’ crystal ball remains a bit cloudy, Bank of America acknowledged.
“It remains to be seen how much of the ‘return to normal’ in SAAR levels in August-September is attributable to pent up demand from very low levels in April-May, versus what may be core demand with the broader economic environment and consumers remaining relatively resilient,” Bank of America noted.
“With this in mind, we are ultimately cautious on our outlook for sales and production trends through the remainder of the year, as visibility still remains very low,” the company said, adding it appears consensus estimates for 2020 sales are settling in the 14 million-unit range compared to the nearly 17 million units sold in 2019.
Bank of America isn’t alone in its positive prediction for September. The pace of U.S. auto sales is expected to rise 3.3% in September from the prior month, helped by strong consumer demand and the Labor Day holiday, according to J.D. Power and LMC Automotive.
They predicted the seasonally adjusted annual sales pace for September to be 15.7 million vehicles, up from 15.2 million vehicles in August, but down from 17.3 million units a year earlier.
“Lockdown measures are now fairly loose in many parts of the world, but a risk of the reintroduction of more restrictive and widespread measures certainly cannot be ruled out,” said Jeff Schuster, president of the Americas operations and global vehicle forecasts at LMC Automotive.
Total sales in September are projected to reach about 1.29 million units, compared with about 1.33 million units in August, and about 1.28 million units a year earlier, according to the J.D. Power and LMC estimate.
The car sales forecast came the U.S. Department of Labor reported that the number of Americans filing for unemployment benefits rose slightly to 870,000. Economists said the large number was a reflection of the high unemployment rate and a sluggish job market.