ByMatt Poskyon July 30, 2019
Automotive Newsrounded up the usual suspects to see what the sales forecast looks like and the prognosis could be better.TrueCar/ALGand J.D. Power/LMC predicted light-vehicle deliveries would decline 2.9 percent and 1.8 percent, respectively. Cox Automotive and Edmunds had a cheerier outlook, proposing slight gains averaging around 0.5 percent vs this time last year.
Considering how poorly the industry seems to be doing as a whole, we’re not quite as optimistic. But nobody has a crystal ball and there are both good and bad examples to draw from. While Nissan is the poster child for a bleak outlook,Â Hyundai had a strong June with sales creeping up by 6.2 percent. In fact, most outlets presumed Hyundai would continue performing well throughout 2019while Nissan begins its recovery efforts.
We’ll have some clarification when most automakers post theirÂ July sales results on Thursday. But premonitions for July are largely mixed, with a touch of melancholy.
From Automotive News:
Edmunds forecasts declines for all but two automakers: General Motors, which it says will post a 5.6 percent gain, and Hyundai/Kia, which it says will have a 9.9 percent gain.
Cox is more optimistic, predicting sales increases at GM (3 percent), Nissan (1.1 percent), Hyundai/Kia (4.9 percent), Volkswagen (2.3 percent) and Subaru (2.6 percent). If the prediction comes true, it would be Subaru’s 92nd consecutive monthly gain.
ALG, which splits Hyundai and Kia, forecasts gains for BMW (up 0.6 percent), Daimler (1.7 percent), Hyundai (6.2 percent) and Kia (3.4 percent). It also forecasts a 67.5 percent gain for Tesla, although other forecasters do not include the electric-vehicle maker in their estimates.
Incentive spending is also looking to be all over the place, with some brands looking to abandon them to stabilized profits while others dump them atop high-margin vehicles to whet consumer appetites.
“Despite buoyant market fundamentals, auto sales are being pulled back by lower incentives,” said Oliver Strauss, Chief Economist for ALG. “SAAR (seasonally adjusted annual rate) however has fluctuated in 2019 more than in previous years, pointing to some uncertainty about the remainder of the year.”
While decreasing incentive spending is likely a wise move for overstretched manufacturers, affordability has become a deciding factor in terms of overall salesÂ â€” even though the demand to buy is there.
“Strong consumer confidence and employment gains are supporting stable demand for light vehicles,” said Charlie Chesbrough, senior economist,Cox Automotive. “However, affordability issues continue to weigh on the market. The estimated average transaction price for a new light vehicle in the U.S. is $37,285 in the most recent Kelley Blue Book report, and we do not see this number coming down.”
For the sake of comparison, the average transaction price for a car in 1980 would be somewhere in the neighborhood of $22,000 after being adjusted for inflation. While theÂ U.S. Bureau of Economic Analysis cites the cost the typical modern-day car as decidedly lower, the math still works out to today’s vehicles costing consumers more overall.
Even if things do improve in July, most agree it’ll be down to the month having an extra day in it this year and warned not to automatically assume it means a national turnaroundÂ â€” not that you really need to bother getting your hopes up. “A lot of people are enjoying vacations and family time in July, so it’s generally not a strong month for auto sales. The fact that automakers could eke out a slight gain is encouraging but not necessarily indicative of a positive trend,” said Jeremy Acevedo,Edmunds’senior manager for insights. “The extra selling day makes things look a little better than they really are, and we still believe sales will continue to trend downward through the back half of the year.”
[Image: Bell Ka Pang/Shutterstock]
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