September auto sales are expected to be strong with a long holiday weekend luring new car buyers into dealer showrooms.
September is promising to be a very good month for the auto industry as a long holiday weekend at the beginning helped pump up sales, according to Santa Monica, California-based True Car Inc.
True Car, a consumer-oriented buying services, is predicting that the seasonally adjusted annualized rate or SAAR for total light vehicle sales should reach 17.7 million unit in September, which will be the best total in more than a decade, versus the very respectable total of 16.5 million units a year ago.
With a number of car makers, among them Subaru, Kia, Hyundai, Ford and Honda, expected to post substantial gains, total new vehicle sales, including fleet deliveries, may rise 12.6% to 1,403,200 compared to 1,246,006 a year ago.
The later-than-usual Labor Day holiday weekend shifted sales activity that typically occurs at the end of August into September, resulting in a robust double-digit increase. Retail volume may increase 13.8% to 1,214,400 units as consumers took advantage of model year-closeout specials, noted Eric Lyman, True Car’s vice president of industry insight.
“Labor Day and model year-end promotions combined to create an impressive outcome this month,” said Lyman, “September’s sales pace underscores the strength of the auto sector’s continued expansion and our confidence that full-year sales will reach 17.2 million units in 2015.”
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On a daily selling rate (DSR) basis, adjusting for one more day this month versus September 2014, sales should rise a more modest 8.1%
Sales of luxury cars and light trucks will likely grow 7.5% compared to a year ago. Both BMW and Mercedes-Benz, two of the top luxury brands, boosted incentive spending during September with Mercedes, increasing incentives by 21%.
With gasoline prices dropping below $2 per gallon in some areas of the country for the first time in a decade, crossover and utility vehicles remain in demand and are propelling overall industry growth. Notably, utility sales for Ford Motor Co.’s Ford division are tracking to be at the highest level in over a decade, Lyman said.
Lyman said Volkswagen may be an outlier this month, following news that software on the carmaker’s diesel models was altered to allow the vehicles to pass emissions tests. Sales of TDI diesel models have been suspended, and the Volkswagen group’s volume may fall 5.2% in September.
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“With 27% of VW sales coming in the form of TDI-equipped cars, we expect an immediate impact on the brand until the stop-sale on TDI vehicles ends,” Lyman said.
Subaru may be the sales leader with a 24.3% rise in total volume, resulting in a best-ever September for the brand. Kia Motors America follows with a 23.1% in unit sales and should also see a record September. Toyota should rank third with a 19.1% increase amid gains for the company’s light trucks.
Meanwhile, the Federal Reserve Board has held off on raising interest rates and while overall U.S. economic conditions are still strong. The Conference Board’s Consumer Confidence Index rebounded by 10.5 points in August, hitting 101.5. Unemployment in August was 5.1%, the lowest for the month in eight years.
Incentive spending by automakers averaged $3,090 per vehicle in September, up 3.9% from a year ago and down 0.1% from August 2015. Ford actually cut its incentive spending in September even as it gained market.
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Other key findings for September: Expected registration mix of 86.5% retail sales and 13.5% fleet versus 85.6% retail and 14.4% fleet last September; and total used auto sales, including franchise and independent dealerships and private-party transactions, may exceed 4,328,643, up 3.2% September 2014, True Car estimated.