DETROIT, Aug. 25, 2016 /PRNewswire/ -- New-vehicle retail sales in August are expected to drop 6.5% from a year ago, and total new-vehicle sales are expected to slip 5.2%, according to a monthly sales forecast developed jointly by J.D. Power and LMC Automotive.
Retail sales are on pace to reach 1,269,600 in August, while total sales are projected to hit 1,492,700. While August 2015 and August 2016 have the same number of selling days (26), last August started on a Saturday, which gave it an extra sales weekend. Retail sales year to date through August are expected to be down 1.2%, compared with the same period in 2015, while total sales are expected to be up 0.5%.
John Humphrey, senior vice president of the global automotive practice at J.D. Power, said: "Following 66 consecutive months of retail sales growth that began in September 2010, we've seen four declines in the past six months, and this much of a pullback in August will be a disappointment for the industry. Softening retail sales amid low interest rates, relatively cheap gas and automakers pushing more aggressive incentives may be an indicator that further growth in this cycle will be difficult. There is opportunity for some catch-up in the all-important Labor Day selling period, but as momentum slows, the industry will need to be cautious to balance volume and margin, as incentives are close to record levels."
Jeff Schuster, senior vice president of forecasting at LMC Automotive, said: "As we look at the remainder of the year, the industry faces an uphill struggle to match last year's performance. With mixed economic signals, it certainly looks like U.S. auto sales may have peaked in 2015. However, it is important to focus on the sustainable high level of demand. Peak does not mean doom and gloom, and while the industry faces risk, it is not destined for a pullback."
J.D. Power and LMC Automotive U.S. Sales and SAAR Comparisons
New-Vehicle Retail Sales
1,269,600 units (6.5% lower than August 2015)1
Total Vehicle Sales
1,492,700 units (5.2% lower than August 2015)
13.2 million units
14.7 million units
14.2 million units
16.8 million units
17.8 million units
17.7 million units
1Figures cited for August 2016 are forecasted based on the first 17 selling days of the month.
The average for new-vehicle retail transaction prices thus far in August are at $30,942—a record for the month— surpassing the previous high of $30,061 in August 2015.
Consumers are on pace to spend $39.3 billion on new vehicles in August, slightly below the August record of $40.8 billion in 2015, but still the seventh highest for any month. The record for consumer spending on new vehicles in a month is $43.7 billion, set in December 2015.
Incentive spending in August has averaged $3,559, the highest ever for the month. The previous high for August was $3,419, set in 2015. The highest incentive spending for any month is $3,753, set in December 2008.
Trucks are accounting for 59.6% of new-vehicle retail sales so far in August, up from 57.5% in the same month a year ago. Truck share is the highest for the month of August but below the record July 2016 record of 60.6%.
The seasonally adjusted annualized rate (SAAR) for retail sales in August 2016 is projected to reach 13.2 million units, down from 14.2 million units in August 2015.
The SAAR for total sales is projected at 16.8 million units in August 2016, down from 17.7 million units a year ago.
Fleet sales are expected to reach 223,200 in August, a 3% increase from August 2015, and account for 15.0% of total light-vehicle sales.
LMC Automotive's forecast for full-year total light-vehicle sales forecast remains at 17.4 million units, 0.3% decline from 2015. The forecast for retail light-vehicle sales remains at 14.0 million units, down 1.6% from 2015.