Market Overview

Will Monthly Auto Sales Decline For 8th Straight Month?

Will Monthly Auto Sales Decline For 8th Straight Month?

Seasonally adjusted annualized auto sales in August are expected to land at 16.6 million units and “will be viewed negatively by investors,” according to the Buckingham Research Group.

The sales projection represents the eighth consecutive month of year-over-year declines in auto sales, according to Buckingham.

Buckingham maintains a Neutral on General Motors Company (NYSE: GM) and Ford Motor Company (NYSE: F). The research firm has a $33 price target for General Motors and an $11 price target for Ford.

Month-to-date U.S. light vehicle retail sales were down 4.4 percent in the first 17 selling days of August, with Buckingham projecting total retail and fleet sales in August to be down 2.9 percent year over year.

“We maintain our view of a maturing auto cycle and the risk it poses in terms of pricing and/or production, leading to our cautious stance on OEM stocks,” Glenn Chin said in a Thursday note.

Some auto retailer names are in a position to grow revenue and earnings, despite the auto sales environment, Chin said.

The analyst highlighted the dealership groups Lithia Motors Inc (NYSE: LAD), which Buckingham rates with a Buy and $118 price target, and Penske Automotive Group, Inc. (NYSE: PAG), which the firm rates with a buy and $61 price target.

Tough Comparisons, With A Bright Spot In GM

Buckingham’s 16.6-million unit sales projection for August stands in contrast to 16.8 million units last month and 17.2 million vehicle sales in August 2016.

Ford sales are down 5.7 percent month to date, trailing the industry, Chin said. The firm LMC Automotive is projecting Ford’s total sales to be down 6.1 percent in August — “a noticeable deterioration from last week’s forecast,” the analyst said.

GM is outperforming, with retail sales up 1.9 percent month to date, Chin said. LMC projects GM’s sales will be up 3.1 percent in August, according to Buckingham.

“Given this, we believe that GM is being much more promotional this month to drive sales volumes.”

Related Links: 

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Gene Munster: Traditional Car Manufacturers Face 'Innovator's Dilemma' 

Latest Ratings for F

Apr 2019DowngradesNeutralReduce
Feb 2019Initiates Coverage OnNeutral
Dec 2018Initiates Coverage OnBuy

View More Analyst Ratings for F
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