The auto industry’s been expecting a big sales month at some point this summer in the wake of the CDK outage that cut into new vehicle sales in mid-June. Some thought it would come in July, but inventory levels we’re quite settled. But now it appears everything’s in place for a 7% year-over-year increase.
New vehicle sales are expected to jump 7% on a year-over-year basis in August.
S&P Global Mobility analysts predict the big rebound from missed sales arrives just as the new model year begins with the 7% rise compared to last August and 11% jump over July’s results. The numbers translate to a seasonally adjusted annual rate, or SAAR, of 15.2 million vehicles.
The numbers could be higher but the market is dealing with several issues that are keeping some consumers on the sidelines.
“New vehicle affordability remains the biggest obstacle preventing further advances in the pace of auto sales,” said Chris Hopson, principal analyst at S&P Global Mobility. “The current environment of still-high interest rates and slow-to-recede vehicle prices are translating to still-high monthly payments and little progress for new vehicle demand levels.”
Big sales could continue
Even though rates are dropping, they’re still higher than consumers are accustomed to. As the rates rose, buyers simply extended their loan terms. However, the rate hikes cause prices to rise beyond consumer — and lender — comfort levels for long-term loans.
The big jump in new vehicle sales has been expected by automakers and dealers alike.
Inventory levels and incentives — two other factors in new vehicle sales — are beginning to rise. Buyers can find the vehicles they want, for the price they want it. However, it’s unclear just how long that will be the case.
According to Matt Trommer, associate director, S&P Global Mobility, “Analysis of July retail advertised inventory data in the U.S. finds that inventory declined compared to month-end June reporting, the first month-over-month drop since May 2023. Available retail advertised inventory at the end of July was up 52.5% compared to last year, but down 2.3% from June 2024.”
On the other hand, Federal Reserve Chairman Jerome Powell suggested in a recent speech it may time to cut rates again. “The upside risks to inflation have diminished. And the downside risks to employment have increased.”
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Charged up
One part of the industry still moving along well are electric vehicles. In fact, the segment’s performing well enough for S&P Global Mobility to assume it will continue as part of its long-term light vehicle forecast.
Sales could jump even higher if prices come down in the near term.
For now, the group expects moderate month-to-month volatility. August BEV share should reach 8.1%, similar to the month-prior reading and continued advancement from the Q1 2024 results.
BEV share is expected to progress over the next several months, continuing the upward trend realized since April 2024, assisted by the roll outs of vehicles such as the Chevrolet Equinox EV and Honda Prologue, followed by new BEVs such as the Jeep Wagoneer S and Volkswagen ID. Buzz slated for release in the second half of 2024.
While new EV buyers are still spending more than their gas- and diesel-power counterparts, the ATP is dropping, according to Cox Automotive. The ATP in July was $56,520, which was higher than June, but lower than the year-ago number by 1.5%.
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