New Car Sales Hitting the Skids in the US | TheDetroitBureau.com- htxurl.info

New Car Sales Hitting the Skids in the US

June sales expected to be 4% lower, KBB says.

by on Jun.26, 2017

New vehicles sales are expected to drop 4% on year-over-year basis in June, according to KBB.

The decline in new vehicle sales appears to be accelerating after a 4% year-over-year drop during the month of June, according to Kelley Blue Book estimates.

KBB puts total sales of 1.46 million units in June 2017, resulting in an estimated 16.3 million seasonally adjusted annual rate, one of the lowest recorded in the past two years when SAARs of 17 million have been the norm as sales of new vehicles reached record levels.

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“Kelley Blue Book projects June will be yet another down month of sales with expected declines in both fleet and retail,” said Tim Fleming, KBB analyst. “With manufacturers continuing to announce production cuts at their plants following weaker consumer demand, it all but solidifies 2017 as a down year. 

“Additionally, we are also seeing lease penetration rates come down from record highs and starting to see a slowdown in the growth of incentives as a result.  Both are good signs for the long-term health of the automotive industry and show manufacturers’ commitment to profitability and preserving future used-car values.”

(Fuel economy ratings still drive new car purchases. Click Here for the story.)

For the first six months of 2017, new vehicle sales are expected to fall by almost 2%, according to an estimate by Wards Auto.

The first half of the year has been particularly difficult for passenger car sales with every segment seeing sales drop, analysts noted.

The decline in sales has forced General Motors to idle some 5,000 workers since the first of the year. Ford has also cut production, while Fiat Chrysler Automobiles has been shielded from layoffs by an extensive model change that led to months-long shutdowns at three major assembly across the U.S.

Volkswagen is expected to buck the trend in June and post sales increases in sedans and SUVs.

June 2017 would represent the fourth month in a row with a SAAR under 17 million, the longest period since a six-month streak from September 2014 through February 2015. After a record sales year in 2016 and seven consecutive year-over-year sales increases, Kelley Blue Book’s forecast for 2017 calls for sales in the range of 16.8 million to 17.3 million units, which represents a 1 to 4% decrease from last year, he said.

(Click Here for more about automakers cutting production levels.)

In June, new light-vehicle sales, including fleet, are off 3.6% compared to June 2016 and down 3.5% from May 2017. The SAAR for June 2017 is estimated to be 16.3 million, down from 16.8 million in June 2016 and down from 16.6 million in May 2017.

Retail sales are expected to account for 79.7% of volume in June 2017, slightly up from 79.4% in June 2016.

KBB also reported that the Volkswagen Group could see the strongest volume growth in June 2017, which would bring its market share up to 3.5%. VW’s potential gains are, in part, due to weak year-over-year comparisons, though recently launched models such as the Audi A5, Volkswagen Golf Alltrack and the new Atlas SUV will likely be responsible for most of the increases. The new models should push both car and truck sales for Volkswagen into positive territory for the month.

Ford Motor Co., on the other hand, is likely to lose the most market share of the major manufacturers, projected at 1%. The declines can be primarily attributed to an expected drop in fleet sales, which would affect sales totals for the higher fleet models such as the Fusion, Focus and Transit vans. In June, KBB estimates Ford’s retail mix to be 68%, an increase of 4% year-over-year.

(To see more about the Senate bill giving automakers CAFE credits, Click Here.)

Sales losses at GM, FCA, Honda, Nissan and Hyundai-Kia are all expected, while Toyota and Subaru are expected to report sales gains for June, according to KBB’s estimate.

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