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August New-Vehicle Sales Strong Amid Weak Economic Growth, JD Power and LMC Report

August 28, 2012

WESTLAKE VILLAGE, Calif. — The August new-vehicle selling rate is expected to be the highest monthly rate in more than four and one-half years, according to J.D. Power and Associatesand LMC Automotive.

August new-vehicle retail sales are projected to come in at 1,066,200 units, which represents a seasonally adjusted annualized rate (SAAR) of 12.3 million units. The year-over-year growth rate in retail sales continues a double-digit trend for a fourth consecutive month.

"August continues this summer's trend of healthy growth in retail sales as dealers work to sell down inventory in time to make room for 2013 models," said John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates. "To date, automakers have been diligent in better balancing production with demand, which has been critical to the improved financial performance for many brands. Going forward, this discipline will be tested as demand looks to cool somewhat through the balance of the year."

While incentives are down slightly in August compared with July ($106 less per vehicle, on average), there are deals driving some activity as the model-year sell down takes hold. Consumers are also pushing aside the economic risks, as the need to replace their current vehicle is matched by availability of both inventory and credit.

Total light-vehicle sales remain stable, with the volume in August expected to come in at 1,285,300 units, a 16 percent increase from August 2011. Fleet represents only 17 percent of total light-vehicle sales, which is lower than the 21 percent year-to-date average. 

LMC Automotive recently revised its outlook for total light-vehicle sales in the United States, lowering it to 14.3 million units from 14.5 million units. Retail sales are expected to total 11.4 million units, down from 11.5 million units. The firm said weaker economic growth and concerns with the European crisis are the driving factors for slower growth during the second half of the year.

The industry is still expected to achieve the 15-million-unit level in 2013, but the outlook has been tempered from a projected 15.2 million units, as the risks in 2012 spill over into next year.

"The strength in August light-vehicle sales takes some of the pressure off expectations for the balance of the year, but a high level of risk lingers," said Jeff Schuster, senior vice president of forecasting at LMC Automotive. "We expect the current seesawing in auto sales to continue for the foreseeable future, but the overall picture in 2012 remains positive."

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