After early predictions of sales falling below 17 million units this year, the industry is now expected to beat that mark again.
Despite a slight dip December sales, the U.S. new vehicle sales are expected to inch past the 17-million unit mark for the fifth straight year.
Cox Automotive analysts are the latest group to predict the industry, which was forecast to come in anywhere from 16.7 million to 16.9 million vehicles sold, will defy conventional wisdom. The industry will enjoy strong December sales, although they’ll be down about 50,000 vehicles, or 3.2%, to 1.58 million.
The seasonally adjusted sales pace is expected to finish near 17.2 million, up from last month’s 17.1 million level, and just above the current 2019 year-to-date pace near 17.0 million. Edmunds analysts estimate 17,145,333 new vehicles will be sold in total in 2019
(Carmakers riding big December sales to pass 17M units)
Strong December sales are critical for the industry, particularly for clearing previous model year inventory from dealerships. A recent study released by ValuePenguin.com reveals that 60% of carmakers now see December as their biggest sales month of the year.
U.S. new vehicle sales were down 2% through the first half of the year.
Consumer interest peaks during the holiday shopping season and buyers take advantage of significant OEM discounts and incentives. In recent years, December sales have been hot with the four best-ever Decembers occurring in the last four years, and the SAAR has averaged more than 17.4 million.
This year appears to be slightly different, according to Charlie Chesbrough, senior economist at Cox Automotive.
(Tis the season – or month anyway – to buy a new car)
“One key factor for this December’s results is the sales calendar,” Chesbrough said. “With 25 selling days, one less than last December, a sales volume decline is expected.
Analysts at Cox Automotive predict that December sales will slip 3.2%.
“In addition, Thanksgiving and Black Friday deals were late last month, shortening the holiday shopping period and possibly pulling some December vehicle buyers forward. In fact, last month’s sales volume was the highest November in history, and 30,000-50,000 above recent years.”
The record for December occurred in 2016 when 1.68 million vehicles sold. The average over the last four December results is closer to 1.63 million, about 70,000 above the minimum needed to reach 17 million.
(Dealers optimistic despite dour forecasts for auto sales in 2020)
A new sales record is possible this month given the upside potential of fleet activity and deep retail discounts, but with fewer selling days, it is highly unlikely. Daily sales in 2019 are averaging close to 55,000, so one less selling day is a major headwind to annual gains, Cox noted.