August 2019 Sales Results Journalist Remarks
Transaction prices for new cars continued to rise year over year in August. According to Kelley Blue Book estimates, the average transaction price for a new vehicle in the U.S. was $37,401, which is down slightly from last month but up 2% from year-ago levels. Read the details here.
Our data also shows traffic on dealer websites was strong in August and a record-level volume of incentives helped deliver sales. See additional details on vehicle incentives in two recent posts: Incentive Program Volume Trending Toward Record Year and Labor Day Weekend is New-Vehicle Clearance Time.
Based on the automakers reporting August sales so far, the Cox Automotive Industry Insights team are providing their thoughts on how the month shaped up.
Charlie Chesbrough, senior economist, Cox Automotive
“August sales are coming in hot as aggressive incentives lifted the market above our forecast. However, the calendar is significantly impacting today’s results, so a clear interpretation of market strength is difficult. An increase in August sales over last year was almost guaranteed given the extra selling day and inclusion of the Labor Day holiday weekend with August’s results.
“And, the surprisingly strong numbers may be misleading. Although the retail/fleet mix is not yet known, the strong performance of some vehicle lines suggests heavy fleet activity may have occurred for some brands. There are also some worrisome signals in the reported results. Small car sales were up big for some OEMs, bucking recent trends, while their luxury brand numbers were weak. This may suggest affordability is having an increasingly large impact on consumer purchases.”
Rahim, manager, economics and industry insights, Cox Automotive
“The incredible year-over-year performance for August sales we are seeing from the OEMs is in part due to the calendar. Major U.S. holiday weekends play a central role in driving new-vehicle sales. On average, the week including Labor Day weekend accounts for over 2% of yearly new retail sales making it one of the busiest weeks of the year along with Memorial Day weekend and the 4th of July. It is important to note that these numbers could have been even higher. Storm preparation and evacuations caused by Hurricane Dorian probably led to softer sales during this time, particularly in Florida, which is the third most important market for new-vehicle sales. Dorian likely subdued some year-over-year sales gains in the affected areas, putting downward pressure on national sales.”
Akshay Anand, executive analyst, Kelley Blue Book
“Strong August sales were helped by Labor Day this year, and the hope is September won’t be too affected by Hurricane Dorian. However, this also means September may look worse than reality for some OEMs because of the wonky calendar and potential weather issues. Fleet sales also need a closer look for some companies, as retail sentiment continues to suggest consumers want SUVs and trucks. That said, any good news is something automakers will no doubt be happy about in a year where dipping sales have been the norm for many.”
Brad Korner, general manager, Cox Automotive Rates & Incentives
“We saw unprecedented incentive program volume in August which keeps us on pace for a record-setting year. Automakers continue to use a plethora of targeted incentives to move inventory which contributes to the high incentive volume but is a smart way to strategically manage inventory mix and competitively adjust pricing and payments.”
And one last note: Forecasting auto sales is a challenging business. However, Cox Automotive Senior Economist Charlie Chesbrough has proven he’s up to that challenge. From July 2018 to July 2019, Charlie forecasted 18,410,000 new-vehicle sales in total as part of his monthly forecasting exercise (i.e., the sum of his forecasts over the 13-month period). Per the U.S. Bureau of Economic Analysis (BEA), during the same period we had 18,427,273 new light vehicle sales reported. Shout out: Charlie’s 13-month total missed by less than 1%.