Some observers are predicting FCA's five-year streak of month-over-month sales increases may come to an end in August.
August auto sales may be mirroring the many of the world’s economies these days: uncertain. Predictions about the final tally run from sales being down to sales being up. Much like investors wondering what to do in the tumultuous stock markets these days, the answer depends upon who you ask.
Kelly Blue Book expects sales to decline 4% year-over-year due to the exclusion of Labor Day weekend in this month’s sales results. If true, the slide could put Fiat Chrysler’s long string of monthly sales increases, which has extended for more than five years, at risk, according to KBB.
On the other hand, TrueCar, the car buying service, suggests sales could wind up rising by 4% and FCA U.S.’s impressive streak of increases is safe.
Both forecasts, however, indicate that the Seasonally Adjusted Annual Rate of sales will top 17 million units once again with KBB predicting a SAAR of 17.2 million units and, while TrueCar’s predictions puts the SAAR at 17.4 million units.
“While the outlook for August remains bright, we must keep an eye on the financial markets which have declined precipitously in the last few weeks on uncertainty in international markets, namely China,” said Alec Gutierrez, senior analyst for Kelley Blue Book.
“We remain confident that sales in August will remain robust; however, should the U.S. financial markets continue to falter, we could see demand for new cars soften in the short to medium term. It should be noted that the unemployment rate in the U.S. remains below 6%, while the auto finance environment remains as attractive as ever, so we don’t necessarily expect to see the sales pace deviate from its current 17 million-plus SAAR trajectory for 2015 unless the stock market continues its downward trajectory in the weeks and months to come,” Gutierrez said.
Retail sales are expected to account for 88.8% of volume in August 2015, up from 88.2% in August 2014, he added.
“This could be the end of Fiat Chrysler Automobile’s streak of consecutive monthly sales increases, which began in March 2010, as Kelley Blue Book projects a 3.2% decline in volume (for FCA),” said Gutierrez. “However, the automaker is still having an incredible year of growth with the highest year-to-date sales increase of all major manufacturers.”
Kelley Blue Book also anticipates that the compact utility segment will top all others in August. With a host of new models at price points around $20,000, and with gas prices remaining reasonable, this segment has never been more popular, said Gutierrez.
“Despite the tough comparison with last August, robust demand for crossovers and pickup trucks continues this month and the industry is right on plan to hit our revised 17.2 million-unit projection for 2015,” said Eric Lyman, TrueCar’s vice president of industry insights. “Last August was a very strong month, with a built-in sales bump from Labor Day. With the Labor Day delay, we anticipate a lot of buying activity in September.”
Lyman noted that overall economic conditions in the U.S. remain strong. The Conference Board’s index of consumer confidence rebounded by 10.5 points in August, hitting 101.5. Meanwhile, the unemployment rate in July was 5.3%, the lowest for the month in eight years. Gas prices also remain favorable, falling to a national average of $2.58 on Aug. 25 from $3.44 a year earlier.
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TrueCar predicts Kia Motors America should be the sales leader among major automakers with a 5.2% rise in total sales volume, and should result in a best-ever August for the automaker. Kia’s gains with the Forte small car have supplemented the brand’s core volume models.
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Subaru follows with a 3.9% increase in unit sales. Ford should be the third-place winner with a 1.2% increase amid gains for the company’s light trucks. In particular, sales of Ford brand utilities are likely to achieve the best August volume in over a decade.
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Incentive spending by automakers averaged $3,066 per vehicle in August, up 2.6% from a year ago and down 0.2% from July 2015, according to TrueCar.