The new-vehicle sales rate in September is forecast by Cox Automotive to rise to 17.1 million units, an improvement compared to August’s 16.6 million. However, total sales volume in September is forecast to decline nearly 60,000 units from last month and nearly 100,000 units compared to September 2017.
Replacement demand and delayed purchases following Hurricane Harvey in August 2017 saw a September 2017 pace of 18.1 million, the highest pace since 2005.Vehicle sales hit an all-time high last year as well, up nearly 80,000 units above the previous two Septembers, which occurred during record sales years.
New light-vehicle sales, including fleet, are expected to reach 1,410,000 units, down more than 100,000 units, or 7.2%, compared to September 2017, and down 4.3% from August 2018. The SAAR in September 2018 is estimated to be 17.1 million, up from last month’s 16.6 million pace but down from last year’s record 18.1 million level.
Sales volume will drop but one less selling day this September (25) versus September 2017 (26) will cause the pace to rise. A record SAAR in September is very unlikely. There is one less selling day in September this year, and sales will need to reach more than 90,000 units above forecast to beat last year’s SAAR record. Without massive incentives and promotions, a record is not expected.
Talk of tariffs and higher interest rates, may be having some pull-ahead impact in the market. Auto buyers, concerned about the increasing likelihood of higher vehicle prices, may be buying sooner than they had originally planned, supporting a higher sales pace.
Risks are also rising. Additional interest rate hikes are expected which will cause a buyer’s monthly payment to increase. And, previous years of aggressive leasing is now creating a major headwind. Millions of gently-used, high-content vehicles have been returning to dealer lots. Off-lease vehicle volume is expected to peak in 2019, and many potential new-vehicle buyers will be drawn to buy used.
Most manufacturers are expected to post sales declines. Jeep is expected to continue to perform well as demand for rugged crossovers fits well with their portfolio. Ford and GM are likely to see some larger declines as aging product in some segments, poor car sales, and tighter incentives hold them back.
Most vehicle segments should see declining sales versus last year. Car share may make a modest improvement as higher prices in the used market coupled with newer high-volume products from Honda and Toyota could support new sales.
Slower Q4
Cox Automotive is forecasting a slowing sales pace over the remaining months of the year as buying conditions deteriorate due to higher interest rates and elevated gasoline prices. Steel and aluminum tariffs may also be negatively contributing to sales activity, by forcing automakers to hold incentive activity at more modest levels. Production costs are rising because of higher metal prices, and margins are being negatively impacted. With less profit margin available, tighter and targeted incentive activity is required. Days supply is also in a relatively stable position, allowing for more pricing discipline.
In addition, off-lease used vehicle volume continues to grow. These gently-used vehicles, selling at a 30-50% discount to their new versions, are a real threat to stronger new-vehicle sales volumes.
However, even with these headwinds, economic conditions for vehicle buyers remain favorable with strong consumer confidence levels and decades-low unemployment rates. The overall demand for personal transportation remains strong. Higher interest rates and new trade tariffs are not chasing away buyers. Cox Automotive’s forecast for full-year auto sales in 2018 is 16.8 million, down from 2017’s 17.1 million volume.
About Ken Zino
Ken Zino, editor and publisher of AutoInformed, is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn.
He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe.
Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped during a downshift and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap.
AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks.
Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.
US September Sales Soothsaying: Downward Trend Continues
The new-vehicle sales rate in September is forecast by Cox Automotive to rise to 17.1 million units, an improvement compared to August’s 16.6 million. However, total sales volume in September is forecast to decline nearly 60,000 units from last month and nearly 100,000 units compared to September 2017.
Replacement demand and delayed purchases following Hurricane Harvey in August 2017 saw a September 2017 pace of 18.1 million, the highest pace since 2005.Vehicle sales hit an all-time high last year as well, up nearly 80,000 units above the previous two Septembers, which occurred during record sales years.
New light-vehicle sales, including fleet, are expected to reach 1,410,000 units, down more than 100,000 units, or 7.2%, compared to September 2017, and down 4.3% from August 2018. The SAAR in September 2018 is estimated to be 17.1 million, up from last month’s 16.6 million pace but down from last year’s record 18.1 million level.
Sales volume will drop but one less selling day this September (25) versus September 2017 (26) will cause the pace to rise. A record SAAR in September is very unlikely. There is one less selling day in September this year, and sales will need to reach more than 90,000 units above forecast to beat last year’s SAAR record. Without massive incentives and promotions, a record is not expected.
Talk of tariffs and higher interest rates, may be having some pull-ahead impact in the market. Auto buyers, concerned about the increasing likelihood of higher vehicle prices, may be buying sooner than they had originally planned, supporting a higher sales pace.
Risks are also rising. Additional interest rate hikes are expected which will cause a buyer’s monthly payment to increase. And, previous years of aggressive leasing is now creating a major headwind. Millions of gently-used, high-content vehicles have been returning to dealer lots. Off-lease vehicle volume is expected to peak in 2019, and many potential new-vehicle buyers will be drawn to buy used.
Most manufacturers are expected to post sales declines. Jeep is expected to continue to perform well as demand for rugged crossovers fits well with their portfolio. Ford and GM are likely to see some larger declines as aging product in some segments, poor car sales, and tighter incentives hold them back.
Most vehicle segments should see declining sales versus last year. Car share may make a modest improvement as higher prices in the used market coupled with newer high-volume products from Honda and Toyota could support new sales.
Slower Q4
Cox Automotive is forecasting a slowing sales pace over the remaining months of the year as buying conditions deteriorate due to higher interest rates and elevated gasoline prices. Steel and aluminum tariffs may also be negatively contributing to sales activity, by forcing automakers to hold incentive activity at more modest levels. Production costs are rising because of higher metal prices, and margins are being negatively impacted. With less profit margin available, tighter and targeted incentive activity is required. Days supply is also in a relatively stable position, allowing for more pricing discipline.
In addition, off-lease used vehicle volume continues to grow. These gently-used vehicles, selling at a 30-50% discount to their new versions, are a real threat to stronger new-vehicle sales volumes.
However, even with these headwinds, economic conditions for vehicle buyers remain favorable with strong consumer confidence levels and decades-low unemployment rates. The overall demand for personal transportation remains strong. Higher interest rates and new trade tariffs are not chasing away buyers. Cox Automotive’s forecast for full-year auto sales in 2018 is 16.8 million, down from 2017’s 17.1 million volume.
About Ken Zino
Ken Zino, editor and publisher of AutoInformed, is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn. He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe. Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped during a downshift and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap. AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks. Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.