U.S. Auto Sales Seen Ending Summer Without A Sizzle
U.S. auto industry sales in August will be about even with a year ago, not quite ending the summer in a sizzling fashion but still warm enough to continue the recovery from a recession now five years in the rear-view mirror, reported Reuters.
Analysts polled by Thomson Reuters expect monthly sales of about 1.5 million new vehicles when automakers report them on Wednesday, with a seasonally adjusted annualized sales rate of 16.6 million. It should be the sixth straight month showing an annualized rate above 16 million, a level reached only twice in 2013.
Auto sales are a closely watched indicator of consumer demand, particularly for big-ticket items, and the industry accounts for roughly one-fifth of all U.S. retail spending.
While sales would be flat with last August, the annualized rate for the month would be up from 16.1 million a year ago because there was one less selling day this year.
Profit-eroding incentives remained high in August, as dealers trimmed prices to help clear lots and make way for 2015 models. Industry research firm Kelley Blue Book said incentives, including rebates and cash-back offers, were on track to end the month between $2,700 to $3,000 per vehicle.
The biggest discounts were on mid-size sedans, which are staying on dealer lots more than 80 days before being sold, compared to 47 days for small crossover sport utility vehicles, Kelley Blue Book said.
While auto sales have strengthened to nearly pre-recession levels, there is concern among some analysts that longer-term loans and increased lending to subprime buyers may be inflating sales. Some new vehicles are being sold with 7-year loans, which could cause owners to hold onto their cars longer, because equity is not established until late in the pay-off cycle.
Chrysler Group LLC, a unit of Fiat SpA, and Nissan Motor Co once again gained market share in August to the detriment of sales leaders General Motors Co, Ford Motor Co and Toyota Motor Corp, according to analysts.
Eight analysts polled by Reuters expect Chrysler to show a monthly sales gain of 13.5 percent, while Nissan is seen ending August up 2.4 percent. Among major automakers, the two are expected to be the only winners.
Michelle Krebs, an analyst with Kelley Blue Book, expects Chrysler will only enjoy a few more months of double-digit gains. This year's gains by Chrysler have been helped by the fact that sales of Jeep Cherokee SUVs were compared to low sales of a model it replaced in late 2013, the Jeep Liberty.
The Reuters poll showed monthly sales declines for GM, down 1.2 percent, Ford, down 1.4 percent, Toyota, down 2.3 percent and Honda Motor Co off 7.9 percent. Hyundai Motor Co and its affiliate Kia Motors Corp are seen down a combined 0.8 percent.
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