New Car Sales To Fall In August: Here's What It Means

Kelley Blue Book recently released its new-car sales forecast for August 2015 and, according to the press release, new-car sales will drop 4 percent over the month, with Labor Day timing impacting on results and Fiat Chrysler Automobiles NV FCAU’s streak probably hitting and end.

As stated above, the firm estimates August sales will decline 4 percent year-over-year, to 1.52 million units, which equates to an estimated 17.2 million seasonally adjusted annual rate (SAAR). Still, this figure would imply an 0.8 percent month-over-month increase in sales. Retail sails are projected to account for 88.8 percent of volume,up from 88.2 percent in August of 2014.

One of the main drivers of the year-over-year tumble is the timing of Labor Day weekend: last year, the holiday was included in August’s results; this year, it will be comprised in September’s figures.

Alec Gutierrez, senior analyst for Kelley Blue Book explained that, “While the outlook for August remains bright, we must keep an eye on the financial markets which have declined precipitously in the last few weeks on uncertainty in international markets, namely China […] We remain confident that sales in August will remain robust; however, should the U.S. financial markets continue to falter, we could see demand for new cars soften in the short to medium term.  It should be noted that the unemployment rate in the U.S. remains below 6 percent, while the auto finance environment remains as attractive as ever, so we don’t necessarily expect to see the sales pace deviate from its current 17 million-plus SAAR trajectory for 2015 unless the stock market continues its downward trajectory in the weeks and months to come.”

A Look Into The Main Automakers & Segments

The analyst added that August could bring the end of Fiat Chrysler’s streak of consecutive monthly sales surges, which has lasted more than 5 years. For August 2015, Kelley Blue Book anticipates a 3.2 percent decline in sales volumes.“However, the automaker is still having an incredible year of growth with the highest year-to-date sales increase of all major manufacturers,” Gutierrez supplemented.

However, one company could challenge the trend: Ford Motor Company F. The F-150 could drive both sales and available inventory in August.

Source: Kelley Blue Book

Gutierrez went on to look into diverse segments. While the compact utility segment is expected to top all others “as a result of moderate gas prices and increased interest in utility vehicles,” the market share for cars is expected to fall.

Source: Kelley Blue Book