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June New-Vehicle Sales Pace Expected to Increase from Year-Ago Levels

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June New-Vehicle Sales Pace Expected to Increase from Year-Ago Levels

Cox Automotive Raises Full-Year Sales Forecast After Strong First Half

PR Newswire

ATLANTA, June 27, 2018 /PRNewswire/ -- New-vehicle sales volume in June is expected to rise 2.1 percent from last year, resulting in a seasonally adjusted annual rate (SAAR) of 16.9 million. The June sales pace is up from last year's 16.6 million rate and is up slightly from the 16.8 million level in May 2018. Through the first five months of 2018, the SAAR has averaged 17.1 million. 

On the heels of those five strong months and with a June SAAR forecast near 17 million, Cox Automotive is moving its full-year forecast up from 16.7 to 16.8 million. Buying conditions for higher-income Americans, who are the new-vehicle market's core constituents, have been very favorable as tax reform has improved income and wealth for these potential buyers. Consumer confidence has also held at near-record levels, buoyed by wage growth and historically low unemployment.

The Cox Automotive team believes the second half of 2018 will see lower sales than the first half, due to the negative impact of rising interest rates and overall market volatility. Tariffs on imported cars, if enacted, has the potential to reduce sales significantly.

"All indicators tell us that we have reached peak market and it won't be getting better from here," said Charlie Chesbrough, senior economist, Cox Automotive. "Monthly sales volume in June is expected to rise over last year, but June has one additional selling day this year – 27 instead of 26, and the pace is not expected to rise very much. June sales volume is expected to reach 1.5 million, an increase of nearly 30,000 units over last year, but a decrease of nearly 85,000 units (down 5.3 percent) from May."

The record for June sales occurred in 2005 when volume reached 1.67 million and a SAAR of 18.0 million was achieved as massive promotions and incentives lifted the market. Beating that record this year is unlikely; however, aggressive incentives will keep the selling rate strong even as monthly payments increase from rising interest rates.

Key Highlights for Estimated June 2018 Sales Forecast:

  • In June, new light-vehicle sales, including fleet, are expected to reach 1,500,000 units, up 2.1 percent, or nearly 30,000 units, compared to June 2017, but down nearly 85,000 units, or 5.3 percent, from May 2018.
  • The SAAR in June 2018 is forecast to be 16.9 million, up from last year's 16.6 million pace, and up from the previous month's 16.8 million level.
  • A record SAAR in June is very unlikely. Sales would need to reach nearly 170,000 units above the forecast. Without massive incentives and promotions, which we haven't seen, achieving this level of increase is not expected.

Sales Increases Expected for Most Auto Makers
GM is expected to continue to see strong sales gains as the popularity of Equinox and Traverse crossovers lifts Chevrolet. Jeep is also expected to perform well as demand for rugged crossovers fits well with their portfolio. Ford is likely to see some declines as aging product in some segments holds them back.


Sales Forecast1

Market Share


Jun-18

Jun-17

May-18

YOY%

MOM%

Jun-18

May-18

MOM

Jun-17

GM

255,000

243,155

264,823

4.9%

-3.7%

17.0%

16.7%

0.3%

16.6%

Ford Motor Co

225,000

227,166

241,527

-1.0%

-6.8%

15.0%

15.2%

-0.2%

15.5%

Fiat Chrysler

202,000

187,348

214,294

7.8%

-5.7%

13.5%

13.5%

-0.1%

12.8%

Toyota Motor Co

200,000

202,376

215,321

-1.2%

-7.1%

13.3%

13.6%

-0.3%

13.8%

American Honda

145,000

139,793

153,069

3.7%

-5.3%

9.7%

9.7%

0.0%

9.5%

Nissan NA

128,000

143,328

131,832

10.7%

-2.9%

8.5%

8.3%

0.2%

9.8%

Hyundai Kia

118,000

110,650

125,518

6.6%

-6.0%

7.9%

7.9%

-0.1%

7.5%

Subaru

55,000

52,057

60,146

5.7%

-8.6%

3.7%

3.8%

-0.1%

3.5%

VW

53,000

51,309

55,531

3.3%

-4.6%

3.5%

3.5%

0.0%

3.5%

Grand Total2

1,500,000

1,468,858

1,584,339

2.1%

-5.3%





 

1 June 2018 Cox Automotive Industry Insights Forecast; all historical data from OEM sales announcements

2 Total includes brands not shown

Car segments are expected to see additional significant declines as consumers continue to switch to SUV/crossover segments. Pickups are forecast to continue their strong pace as all three domestic makers compete for buyers with excellent product and aggressive incentives. 


Sales Forecast1

Market Share

Segment

Jun-18

Jun-17

May-18

YOY%

MOM%

Jun-18

May-18

MOM

Jun-17

Compact SUV/Crossover

275,000

236,644

285,474

16.2%

-3.7%

18.3%

18.0%

0.3%

16.1%

Mid-Size SUV/Crossover

220,000

202,023

229,948

8.9%

-4.3%

14.7%

14.5%

0.2%

13.8%

Full-Size Pickup Truck

210,000

201,268

216,867

4.3%

-3.2%

14.0%

13.7%

0.3%

13.7%

Compact Car

165,000

182,107

182,382

-9.4%

-9.5%

11.0%

11.5%

-0.5%

12.4%

Mid-Size Car

135,000

150,550

147,376

-10.3%

-8.4%

9.0%

9.3%

-0.3%

10.2%

Grand Total2

1,500,000

1,468,858

1,584,339

2.1%

-5.3%





 

1 Cox Automotive Industry Insights data

2 Total includes segments not shown

All percentages are based on raw volume, not daily selling rate. There are 27 selling days in June 2018 versus 26 in 2017.

Additional Insights from the Cox Automotive team
Although the sales pace is expected to slow a bit, the vehicle market remains on sound footing. Higher interest rates are not helpful to the vehicle buyer; however, gradual rate increases have been expected and should not cause a large decline in affordability and overall market demand. Economic conditions remain positive with strong consumer confidence levels and decades lows unemployment rates. As noted earlier, the passage of tax reform has fueled the new-vehicle market in 2018, as new-car buyers likely benefited the most from the reforms.    

Federal Reserve interest rate increases, on the other hand, are starting to influence the economy and auto loan rates have risen to levels not seen since 2013. Gasoline prices are now well above 2017 levels, negatively impacting consumer spending abilities and vehicle ownership costs. And, notably, aggressive leasing strategies in recent years are now resulting in millions of "gently-used" off-lease vehicles available to consumers and providing growing competition for the new-vehicle market.

Monthly Sales Day Conference Call Hosted by Cox Automotive
Cox Automotive will host its monthly automotive sales day call on Tuesday, July 3, at 11 a.m. EDT. Chesbrough will be joined by Chief Economist Jonathan Smoke and Michelle Krebs, executive analyst at Autotrader, to provide an economic overview, share industry trends and answer questions. To discuss any automotive-related topic with a Cox Automotive analyst, contact a member of the Public Relations team to schedule an interview.

About Cox Automotive
Cox Automotive Inc. makes buying, selling and owning cars easier for everyone. The global company's 34,000-plus team members and family of brands, including Autotrader®, Dealer.com®, Dealertrack®, Kelley Blue Book®, Manheim®, NextGear Capital®, VinSolutions®, vAuto® and Xtime®, are passionate about helping millions of car shoppers, 40,000 auto dealer clients across five continents and many others throughout the automotive industry thrive for generations to come. Cox Automotive is a subsidiary of Cox Enterprises Inc., a privately-owned, Atlanta-based company with revenues exceeding $20 billion. www.coxautoinc.com

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SOURCE Cox Automotive

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