Despite a strong daily sales rate, U.S. new vehicle sales in September will fall short of August's results.
The total number of vehicles sold in September is likely to drop, according estimates from Edmunds and Cox Automotive.
Total sales volume in September, even though running ahead of August’s pace, is forecast to decline nearly 60,000 units from last month and nearly 100,000 units compared to September 2017, Cox said.
“Year-over-year comparisons are challenging this September, as the industry saw record sales levels last year,” noted Charlie Chesbrough, senior economist at Cox Automotive.
“With one less selling day this September and due to seasonal adjustment factors, the sales pace will actually show an increase, despite significant volume declines,” he said.
(Trucks, sport-utes continue to gain market share. Click Here for the story.)
Victims recovering from Hurricane Harvey last year pumped auto sales up.
Replacement demand and delayed purchases after Hurricane Harvey hit the Texas coast in August 2017 helped lift September 2017 to a sales pace of 18.1 million units, the highest level since 2005.
In addition, new vehicle sales hit an all-time high last year as well, up about 80,000 units above the previous two Septembers, which occurred during record sales years. A large decline from last September’s unnaturally high level is expected, and recent storms and flooding in the Southeast will only contribute to weak volumes, he noted.
Talk of tariffs, as well as increasing interest rates, may be having some pull-ahead impact in the market. Auto buyers, concerned about the likelihood of higher vehicle prices throughout the year, may be buying sooner than they had originally planned, supporting a higher sales pace, Cox analysts noted.
Although the market and buying conditions are strong, risks are also rising. The Fed’s interest rate hike this week will cause a buyer’s monthly payment to increase.
(Click Here for details about August’s better-than-expected sales numbers.)
Also previous years of aggressive leasing is now creating a major headwind. Millions of gently used, high-content vehicles have been returning to dealer lots. Off-lease vehicle volume is expected to peak in 2019, and many potential new-vehicle buyers will be drawn to this value alternative.
New vehicle sales will be hurt by an influx of two-year old off-was vehicles.
Edmunds forecasts that 1,392,434 new cars and trucks will be sold in the U.S. in September for an estimated seasonally adjusted annual rate of 17 million.
“Vehicle replacement demand following Hurricane Harvey bolstered auto sales last September, and Hurricane Florence has had a very limited impact on auto sales this month, which are the primary reasons why we’re seeing this year-over-year decline,” said Jeremy Acevedo, Edmunds’ manager of industry analysis.
“With that said, a SAAR of 17 million is certainly not an unhealthy number — September is still shaping up to be a robust month for sales.”
(To see more about August’s new vehicle sales, Click Here.)
Data indicates September marks the first time that the SAAR has pushed above 17 million in two months. Experts note that this boost in sales may be attributed to automakers loosening the reins on incentives as they get ready to navigate the model-year sell down.