June new car sales expected to dip: JD Power and LMC Automotive

DETROIT: June 2016 — New-vehicle retail sales in June are expected to reach 1,206,700 units, a 0.5% decline from a year ago on a selling-day adjusted basis, according to a monthly sales forecast developed jointly by J.D. Power and LMC Automotive.

Retail sales through the first half of 2016 are projected to reach 6.8 million units, down 0.2% from the same period in 2015. With the sales slowdown expected to continue in the second half of the year, LMC Automotive is reducing its retail light-vehicle sales forecast for the year to 14.2 million units from 14.3 million units.

  • The seasonally adjusted annualized rate (SAAR) for retail sales in June 2016 is projected to reach 13.3 million units, down from 13.5 million units in June 2015.
  • New-vehicle retail transaction prices thus far in June are at an all-time high for the month at $31,089. The previous record was $30,202, set in June 2015. Incentives are also at a record high for the month of June at $3,278 per vehicle, $119 per vehicle more than the previous high in June 2015.
  • With record transaction prices, consumers are on pace to spend $37.5 billion on new vehicles in June, surpassing the record high of $35.2 billion for the month of June, set in 2015.
  • Increased fleet sales are expected to off-set slower retail sales, increasing total light-vehicle sales in June to 1,546,800, a 0.8% increase on a selling-day adjusted basis from 1,475,062 a year ago. Fleet sales are expected to hit 340,000, a 5.9% increase from 308,640 in June 2015 on a selling-day adjusted basis.
  • The SAAR for total sales is projected at 17.0 million units in June 2016, the same level as a year ago.
  • The lower level of retail sales has had an impact on the total light-vehicle market. LMC Automotive is maintaining its full-year forecast at 17.7 million, but cautions that volume may be at risk, as rising fleet sales may not be enough to maintain total volume.

J.D. Power and LMC Automotive U.S. Sales and SAAR Comparisons

  June 20161 May 2016 June 2015
New-Vehicle Retail Sales 1,206,700 units

(0.5% lower than June 2015)2

1,207,853 units 1,166,422 units
Total Vehicle Sales 1,546,800 units

(0.8% higher than June 2015)2

1,535,331 units 1,475,062 units
Retail SAAR 13.3 million units 13.7 million units 13.5 million units
Total SAAR 17.0 million units 17.4 million units 17.0 million units

1Figures cited for June 2016 are forecasted based on the first 16 selling days of the month.

2The percentage change is adjusted based on the number of selling days in the month (26 days in June 2016 vs. 25 days in June 2015).

John Humphrey, senior vice president of the global automotive practice at J.D. Power, said: “We have seen a slowdown in retail demand since April, posing a significant challenge to manufacturers on a volume basis. Despite sales slowing down, consumer spending remains at record levels due in large part to a continued shift from cars to trucks. The key going forward will be to what degree automakers are able to adjust production levels to slowing demand rather than relying on profit-damaging incentives to move inventory. This will be something to watch as the industry is nearing what is close to being the peak of an average cycle.”

Jeff Schuster, senior vice president of forecasting at LMC Automotive, said: “Year-over-year growth is evaporating, and while we are now expecting a slight contraction in retail sales, the total light-vehicle market should remain 1% higher than 2015. However, risks continue to mount for the second half of 2016, with 200,000-300,000 units of volume risk. If the selling rate averages 17.5 million units, which is higher than the projected 17.1 million-unit pace in the first half of the year, total sales for the year will end at 17.4 million units, or a decline of 0.3% from 2015.”

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New vehicle sales may jump 8.1% in February: JD Power

DETROIT, Mich. — New-vehicle sales in February 2016 are expected to increase 8.1% from a year ago, according to a monthly sales forecast developed jointly by J.D. Power and LMC Automotive.

New-vehicle retail sales in February are projected to reach 1,046,700 units from 968,316 in February 2015, with the same number of selling days (24 days).

The seasonally adjusted annualized rate (SAAR) for retail sales in February 2016 is expected to reach 13.9 million units, up significantly from 12.8 million units in February 2015 and the strongest retail SAAR in the month of February since 2002 (14.7 million).

Total light-vehicle sales are expected to reach 1,357,800, up from 1,255,769 from a year ago.

The SAAR for total sales is projected to reach 17.7 million units in February 2016, up 1.4 million units from 16.4 million a year ago and the highest rate since 2000 (18.9 million).

J.D. Power and LMC Automotive U.S. Sales and SAAR Comparisons

February 2016    January 2016     February 2015

New-Vehicle Retail Sales
1,046,700 units    892,119 units    968,316 units
(8.1% higher than Feb. 2015)
Total Vehicle Sales
1,357,800 units     1,147,132         1,255,769
(8.1% higher than Feb. 2015)
Retail SAAR
13.9 million units   14.1m units        12.8m units
Total SAAR                           17.7 million units    17.6m units        16.4m units

Figures cited for February 2016 are forecasted based on the first 11 selling days of the month.

Thus far this month, the compact car segment posts the highest retail sales in the industry for the second consecutive month. Demand for compact cars is driven, in part, by product activity: high incentives that are offered on outgoing vehicles ahead of the launch of the redesigned vehicle attract the budget-conscious, while all-new or redesigned models revitalize interest in the segment. Unfortunately, the improvement in compact car sales is not enough to offset weakening demand for cars overall, with market share for cars at only 42%, the lowest level on record for the month of February.

Consumers are on track to spend more than $32 billion on new vehicles in February, nearly $3 billion more than in February 2015 and for the first time exceeding $30 billion in the month of February.

Customers are opting for leasing and long-term loans at record levels. So far in February, leases and loans of 72 months or longer combine to represent 65.1% of all retail sales, a record level for any month. The previous record was set in January 2016 at 64.3%.

John Humphrey, senior vice president of the global automotive practice at J.D. Power, said: “The year-over-year sales growth projection for February is strong, but we need to keep in mind that it is aided by the fact that sales in the upper East Coast, Midwest and Texas were hampered by weather last February. To further put the February sales projection into context, while the retail SAAR of 13.9 million is unquestionably a high level of vehicle demand, it is the lowest monthly level since last June and well below the 15.3 million pace last September.”

Jeff Schuster, senior vice president of forecasting at LMC Automotive, said: “Thus far, 2016 is off to the races, with February looking to keep the selling rate in line with expectations. Consumers seem to be shrugging off the volatility in the stock market and higher interest rates. Very low fuel prices and many new vehicles in showrooms should help drive another strong year for auto sales.”

LMC Automotive’s forecast for 2016 remains 17.8 million units for total light-vehicle sales and 14.5 million units for retail light-vehicle sales.

JD Power: May new car sales could hit 14.1M, tops in 2015…so far

WESTLAKE VILLAGE, Calif.: — U.S. new-vehicle retail sales, on a selling-day adjusted basis, in May 2015 are expected to reach their highest levels since August 2014, according to a monthly sales forecast from J.D. Power and LMC Automotive.

Retail Light-Vehicle Sales

The new-vehicle retail seasonally adjusted annualized selling rate (SAAR) in May is expected to be 14.1 million units, on par with the level reached in May 2014 and the first time the retail SAAR has reached 14.1 million units since August 2014.

New-vehicle retail sales in May 2015 are forecasted to reach 1,300,600 units, a 2 percent increase on a selling-day adjusted basis compared with May 2014. The sales pace of 50,000 units per day in May 2015 is the strongest daily selling rate in the month of May since 2004 when an average of nearly 53,000 vehicles were sold each day. Retail transactions are the most accurate measure of consumer demand for new vehicles.

U.S. Retail SAAR—May 2014 to May 2015  (in millions of units)

 

Source: Power Information Network® (PIN) from J.D. Power

“The industry continues to outperform prior-year levels with respect to retail sales and transaction prices,” said John Humphrey, senior vice president of the global automotive practice at J.D. Power. “The average new-vehicle retail transaction price so far in May is $30,428, on pace to achieve a new record for the month.” The previous record was set in May 2014 when retail transaction prices averaged $29,400.

The combination of strong sales and high transaction prices positions May to set a new record for the month for consumer spending on new vehicles at approximately $39.6 billion, according to the Power Information Network (PIN) from J.D. Power.  It would become the third-highest level of new-vehicle consumer spending in a month following August 2014 ($40.3 billion) and July 2005 ($39.7 billion).

While average gas prices across the nation have slowly climbed from January’s low of $2.12 per gallon to $2.72 per gallon so far in May, refinery constraints in California have driven fuel prices in that state up at a much faster rate. Regular fuel prices in California averaged $3.77 per gallon so far in Mayup from $2.55 per gallon in January—their highest level since September 2014.

High gas prices are contributing to increased hybrid and electric vehicle (EV) sales, which have accounted for 9.8 percent of all retail new-vehicle sales in California in May, their highest level since August 2014. Hybrid and EV sales have also started to recover nationwide, representing 3.5 percent of all retail sales in May, up from a low of 2.9 percent in February. In August 2014, hybrid and EV sales made up 4.3 percent of nationwide sales and 10.5 percent of retail sales in California.

Total Light-Vehicle Sales

Total light-vehicle sales in May 2015 are projected to reach 1,591,100, a 3 percent increase on a selling day adjusted basis compared with May 2014. Fleet volume is expected to hit 290,500 units, accounting for 18.3 percent of total sales, up from 17.6 percent a year ago.

 

J.D. Power and LMC Automotive U.S. Sales and SAAR Comparisons

  May 20151 April 2015 May 2014
New-Vehicle Retail Sales 1,300,600 units

(2% higher than May 2014)2

1,150,557 units 1,322,201 units
Total Vehicle Sales 1,591,100 units

(3% higher than May 2014)2

1,452,241 units 1,605,373 units
Retail SAAR 14.1 million units 13.4 million units 14.1 million units
Total SAAR 17.3 million units 16.5 million units 16.7 million units

1Figures cited for May 2015 are forecasted based on the first 14 selling days of the month.

2The percentage change is adjusted based on the number of selling days in the month (26 days in May 2015 vs. 27 days in May 2014).

Sales Outlook

LMC Automotive is maintaining its total light-vehicle sales forecast for the year at 17.0 million units and its retail forecast at 13.9 million units.

“May’s selling rate is making up for a slightly weaker April, and keeping the year on track to reach the elusive 17 million unit mark,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “Over the next several months, all eyes will be on the timing of the expected increase in interest rates by the Federal Reserve, as the rate increase could have a significant impact on auto sales volume by year-end.”

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North American Production

North American production in April 2015 reached 1.49 million units, outpacing March and up 5 percent from April 2015. As a result, automakers built up some inventory as the industry heads into the summer selling season. May started with a 65-day supply, up from 59 days the previous month but still below the 69-day supply the industry was at during the same point last year.

LMC Automotive’s production forecast for 2015 also remains at 17.5 million units, a 500,000 unit increase compared with 2014. The continued popularity of SUVs is helping to drive up production numbers through April 2015, with SUV production in North America up 130,000 units, a 6 percent increase compared with the same period in 2014, with 70 percent of the increase in the midsize and large SUV segments.