US light-vehicle sales decline 12 percent year-over-year in July

US light-vehicle sales are estimated to have dropped 12.2% year
on year (y/y) to 1,227,420 units in July and decreased 21.8% y/y to
7,688,741 units in the year to date (YTD). The seasonally adjusted
annual rate (SAAR) of US light-vehicle sales is estimated to be
14.1-14.5 million units in July. Although remaining well below the
year-earlier levels, light-vehicle sales in July are expected to
have improved from the month prior reading and reflect little
immediate impact from rising counts of coronavirus disease 2019
(COVID-19) cases in some US regions.

Several automakers have moved to quarterly reporting of US
sales. Along with the Detroit Three automakers, Audi, BMW, Daimler,
Nissan, Porsche, and Volkswagen (VW) have shifted to quarterly
reporting of US sales.

Outlook and implications

At the time of writing, the seasonally adjusted annual rate
(SAAR) of US light-vehicle sales is estimated to be 14.1-14.5
million units in July, representing a meaningful improvement from
the SAAR reading of 13.0 million units in June. The US sales
figures for July reflect sustained retail sales levels and some
modest recovery in commercial fleet activity. While there was
concern regarding the rising number of COVID-19 cases in some US
states during last month, this does not seem to be reflected in the
new vehicle demand levels for the month. The outlook for the second
half of the year remains opaque, but the consecutive monthly rises
in auto demand levels from April’s low SAAR reading of 8.7 million
units indicates that consumers who are willing, ready and able to
make a new car purchase are doing so. The estimated sales results
for July lends some upside bias to the IHS Markit light-vehicle
sales projection of 13.3 million units for full year 2020 as
reflected in the July 2020 forecast release.

There were 26 selling days in July this year, one more than the
year-earlier period. On a unit volume level, July sales are
estimated to have climbed to approximately 1.22 million units, more
than the month prior result of 1.11 million units, but down
approximately 13% from the July 2019 volume level. Plenty of
headwinds remain as we progress through the second half of the
year, including potential inventory concerns, lack of fleet
activity, still high unemployment, and potentially waning incentive
levels, but monthly unit sales levels should remain above the
million-unit mark for the remainder of the year.

North American auto production came to a standstill by
mid-March, with most plants not coming back on line before mid-May,
depending on region and automaker. By 8 June, all production in the
US and Canada had resumed. Mexico saw most production resume by
about 1 June, with the last two vehicle assembly plants back on
line on 16 June. Stock management will be an important variable
moving through the immediate forecast horizon and there could be
some model-level pressures as the sales pace recovers. Month-end
July inventory levels, as reported by AutoData, at the time of
writing, were estimated to be down moderately from levels in the
previous month. Compared to month-end June, July’s industry
inventory was down approximately 55,300 units. The days’ supply
reading at the end of July was 54 days’ supply, down from a 58
days’ supply level at the end of June.

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