U.S. new vehicle sales in August are expected to reach 1.49 million — an increase of about 100,000 units (1.0 per cent) from the same period in 2017, and nearly 10 per cent from the previous month, according to a sales forecast from Cox Automotive.
As for the seasonally adjusted annual rate (SAAR), the 16.8 million units that was predicted in August has gone up incrementally from July’s 16.7 million, and has increased from the sales rate of 16.5 million in August 2017.
“The market remains strong and all the talk of higher interest rates and trade tariffs is not chasing away buyers,” said Charlie Chesbrough, senior economist at Cox Automotive. “However, we are still forecasting a slowing sales pace over the remaining months of the year as buying conditions slowly deteriorate due mostly to higher interest rates and continued high gasoline prices.”
Those are not the only factors contributing to weakening sales: the impact of trade policies and the high steel and aluminum taxes imposed on imported materials imported to the U.S. have led to higher production costs and have negatively impacting profit margins. This has resulted in carmakers demonstrating more incentive restraint, according to Cox Automotive’s news release, which adds that “Days-supply is also relatively stable, driving further incentive discipline.”
Fear of the U.S. imposing a 25 per cent tariff on autos and auto imports from Canada, which would lead to additional costs that would trickle down to the consumer, may push them to buy sooner than intended. This helps support a higher sales pace.
Most vehicle segments are expected to see month-over-month improvements. Car segments, however, will likely experience “significant, and continued, declines,” said Cox Automotive. They add that “Compact crossovers are forecast to continue to post strong year-over-year gains, while pickups are expected to sell well thanks to incentives on older models and interest in new models from GM and FCA.”
