Despite some difficult times recently, Fiat Chrysler is expected to continue its streak of consecutive months with a sales increase to 64 in July.
New-vehicle sales remain robust during July as the auto industry continues to track towards its best year in a decade despite the uncertainty created by the slow-growing U.S. economy.
Sales are expected to increase 2.6% year-over-year in July 2015, resulting in an estimated 17.1 million seasonally adjusted annual rate, according to estimates from Kelley Blue Book and J.D. Power.
“As the industry settles into the summer selling season, new-car sales are expected to remain consistent with last month’s numbers, representing modest and slowing growth versus last year,” said Alec Gutierrez, senior analyst for Kelley Blue Book.
“Sales in the first half of the year totaled 8.5 million units, a year-over-year improvement of 4.4% and the highest first-half volume since 2005. Total sales in 2015 are projected to hit 17.1 million units overall, a 3.6% year-over-year increase and the highest industry total since 2001.”
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Gutierrez said the seasonally adjusted annual rate (SAAR) for July 2015 is estimated to be 17.1 million, up from 16.4 million in July 2014 and even with June 2015 and retail sales are expected to account for 87.1% of volume in July 2015, up from 85.9% in July 2014.
“The industry continues to outperform prior-year levels with respect to retail sales and transaction prices,” said John Humphrey, senior vice president of the global automotive practice at J.D. Power. “The average new-vehicle retail transaction price so far in July is $29,673, on pace to achieve a new record for the month.”
Humphrey added he current retail transaction price record for the month was set in July 2014, when retail transaction prices averaged $29,428, according to the Power Information Network.
The combination of strong sales and high transaction prices positions July consumer spending on new vehicles to reach $37.4 billion, the highest level for the month since July 2005 and an increase of $1.2 billion compared with July 2014. Through the first seven months of 2015, consumers are projected to spend $243.3 billion on new vehicles, exceeding the total for the full year in the recession year of 2009 when they spent $227.2 billion.
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Humphrey said the industry continues to source much of its retail sales growth from SUVs. The largest segment in July 2015 is compact SUV, which has grown its share of industry by 0.9 percentage points from July 2014 and has doubled in size since 2005.
The segment with the strongest year-over-year growth in July 2015 is small SUV, which has grown 1.7 percentage points from last July. Additionally, the small SUV segment has increased its share of industry eightfold since 2005, when it represented only 0.5% of retail sales.
The largest year-over-year decline in segment size is midsize car, which has dropped 1.2 percentage points of market share compared with July 2014, but is up 4.3 percentage points from July 2005. The large pickup segment has experienced the largest share decline (6.8 percentage points) since July 2005, when it was the market share leader. In July 2015 it has dropped to the fifth largest segment. However, the large pickup segment is up 0.5 percentage points in July 2015 compared with July 2014.
KBB also projected that Fiat Chrysler Automobiles, despite the announcement of major recalls in recent days, and Nissan will gain market share in July.
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“Fiat Chrysler Automobiles should extend its sales gain streak to 64 consecutive months with expected growth of 4.4%, almost entirely on the momentum of the Jeep brand,” said Gutierrez.
“Jeep has set monthly records for the past 20 months, and Jeep has grown nearly 40% of Fiat Chrysler’s U.S. sales numbers. With the Cherokee more popular than ever, and the increasing availability of the new Renegade, July should be another month of double-digit growth for Jeep,” he added.
Nissan North America also is poised to gain market share in July 2015, with strong sales of its crossovers, including the Rogue and recently redesigned Murano, Gutierrez said. The Rogue has been well received since its redesign in late 2013, and the new Murano is hitting the market at a time when mid-size utility sales are growing more than 10%.
“Light-vehicle sales continue to be on track after June ended right at expectations, continuing a great run for auto sales,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “The industry has found its groove and consumers continue to respond and make purchases, replacing their aging or off-lease vehicles,” he added.
Strong sales have also boosted production.
North American production in June 2015 was 1.56 million units, a 5% increase over both June 2014 and May 2015. Production through the first half of the year is up 220,000 units (2.5%) compared with the same period last year. Given the brisk production output in June, manufacturers boosted inventory to a 61-day supply, up from 56 days in May and 60 days in July 2014.
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Helping to drive the growth through the first half of the year is the increasing popularity of SUVs in the North American market. SUV output in 2015 increased by nearly 200,000 units through June compared with the same period last year. Aiding the SUV growth for the period was the significant reduction of midsize van output due to shutdown activity, which ultimately benefitted the midsize and large SUV segment vehicles. LMC Automotive’s production forecast for 2015 remains at 17.5 million units, a 500,000-unit increase compared with 2014.