New products - such as the redesigned Toyota Corolla - are helping push car sales higher.
Robust sales of new vehicles during the early summer months have continued in August, with demand for new cars, trucks and crossovers on pace to surpass May for the highest levels in 2014, according to a monthly sales forecast developed jointly by J.D. Power and LMC Automotive.
That echoes the findings of another new study showing that U.S. motorists have run up record levels of automotive loan debt this year. John Humphrey, senior vice president of the global automotive practice at J.D. Power, notes that continued high levels of consumer expenditures on new vehicles demonstrate continued improvement of the health of the industry.
“We expect consumer spending on new vehicles in August to approach $39 billion, the highest level on record for the month of August and second-highest month ever behind July 2005 when it was $39.7 billion,” said Humphrey. “The record consumer spending is fueled by both high sales volumes and high transaction prices.”
Separate research indicates the typical new vehicle sold in the U.S. is now going for an Average Transaction Price – MSRP adjusted to reflect options and incentives – of $29,300, a record for the month of August, and a $402 increase from year-earlier figures.
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Retail light-vehicle sales are projected to hit 1.3 million units, while total light-vehicle sales are expected to reach nearly 1.5 million in August 2014, both a 3 % increase on a selling-day adjusted basis, compared with August 2013.
The seasonally adjusted annualized rate (SAAR) for retail sales in August 2014 is expected to be 16.5 million units, well above the 16 million forecast most analysts and manufacturers have been using for 2014 overall.
A variety of factors appear to be contributing to the surge in sales, including an improved economy, easier credit, and a flood of new and well-reviewed products. Consumer confidence, another key factor in car purchases, also is improving, according to the University of Michigan-Reuters Index of Consumer Sentiment.
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Total light-vehicle sales in August 2014 are expected to surpass July sales by more than 60,000 units. Following several months of lower-than-expected fleet volume, fleet sales in August are expected to reach 162,000 units, or 11 % of total light-vehicle sales, consistent with the level a year ago.
LMC Automotive is maintaining its forecast for U.S. auto sales in 2014 of 16.3 million units, up 5% from 2013 levels.
“As a very robust summer selling season winds down, optimism continues in the auto industry for the remainder of 2014, with expectations of economic growth beginning to catch up to the growth in autos,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive.
“As we look at scenarios for 2015 light-vehicle sales, external factors, including global conflicts and capital flight from emerging markets, account for the majority of the risk to further and expected growth in the U.S.”
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Bolstered by reduced factory shutdowns, North American light-vehicle production in July 2014 totaled 1.2 million vehicles and a 17% increase compared with July 2013. Total production through July 2014 is at 9.7 million units, nearly 5%, or 400,000 units, higher than it was for the same period in 2013.
Inventories also remain in the normal range of 60-65 days, according to Power and LMC, as August began at a 62-day supply. With inventory levels in check, and sustained positive outlook for local and export demand for the remainder of the year, LMC Automotive is maintaining its 2014 North American production forecast at 16.8 million units.