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Turboed And Revving, Kelley Blue Book Projects July Auto Sales To Zoom

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Turboed And Revving, Kelley Blue Book Projects July Auto Sales To Zoom

Kelley Blue Book released its U.S. auto sales projections for July on Thursday. The research company expects 2.6 percent year-over-year sales growth for a total of 1.47 million vehicles purchased during the month.

General Motors Company (NYSE: GM), Toyota Motor Corp (ADR) (NYSE: TM) and Ford Motor Company (NYSE: F) are expected to be the top three sellers. Kelley Blue Book's analysts also predict that Fiat Chrysler Automobiles NV (NYSE: FCAU) will continue a 64-month growth streak "driven almost entirely by the Jeep brand."

Related Link: Jeep Hijack Brings IoT Cybersecurity Back Into Focus

The agency also forecasts 3.6 percent annual growth in U.S. auto sales, which would make 2015 the best year for cars since 2001.

Benzinga spoke with Kelley Blue Book analyst Tim Fleming to get his thoughts on the figures.

SUVs Are The Story

Fleming highlighted the increasing popularity of small SUVs and utility vehicles as "the main story" in the auto market. He noted that while car sales are actually in decline, SUV sales are up about 10 percent year-over-year.

Fleming said that consumers "really love the extra utility and ride height." Plus, according to him, the vehicles aren't much more expensive than sedans, especially given consistent and relatively low gas prices. Furthermore, he told Benzinga, larger cars are quickly catching up to their smaller counterparts with regard to fuel efficiency.

Related Link: "FCA Replay" Wraps Up The Week

American Manufacturers Benefit

This trend toward larger vehicles has yielded benefits for American manufacturers, said Fleming. He noted Chrysler's success with its Jeep division, saying also that Asian firms tend to focus on cars.

Korean brands, Fleming said, are especially car-centric. According to him, three quarters of HYUNDAI MOTOR CO LTD (OTC: HYMLF) and KIA MOTORS CORP ORD (OTC: KIMTF)'s sales are driven by sedans.

Related Link: Honda Begins Automobile Production In Nigeria

Lease, Lease, Lease

Fleming also highlighted the importance of leases, which are considered new car sales in the Kelley Blue Book report. "Leasing is hitting about 30 percent of the car market right now."

With interest rates near zero, he said, financing leases is relatively easy. Furthermore, Fleming believes that high used car prices are helping keep lease payments affordable.

Macro Outlook

"Car sales are a good representation of consumer spending," he said, "so this is a good indicator for the overall U.S. economy."

Today And Beyond

However, Fleming noted that sales growth has been slowing. He expects the auto sector to level off within the next few years, but said that he couldn't offer a more specific timeline.

Curiously, all of the big three U.S. automakers (Ford, GM, and Fiat Chrysler) are struggling in the market Friday. The firms are each down between 1.5 and 2.5 percent.

Image Credit: Public Domain

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