Auto sales slowed in September after a hot summer, but 2013 is still likely to be the industry's best year since before the economy collapsed.
Are the cool days of autumn coming faster than anticipated? Preliminary numbers suggest that the automotive sales boom, at least, is cooling down after a torrid summer that took almost everyone by surprise.
The industry is set to release monthly numbers Tuesday, and the sales pace has clearly slowed during September, according to reports from manufacturers and analysts. The seasonally adjusted annual rate of sales, or SAAR, is projected to fall from a hot 16.1 million units in August to something closer to 15.2 million in September.
"September 2013 new-vehicle sales represent the first year-over-year drop since May 2011, due to slower retail sales, two fewer sales days in the month, and this year's Labor Day sales included in August 2013 totals," said Alec Gutierrez, senior analyst at Kelley Blue Book.
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On the positive side, the summer surge means that 2013 is still likely to be the industry’s best year since before the nation’s economy collapsed – and sales seem on track to surpass the forecasts most experts made early in 2013, which called for volume to slide somewhere between 15.0 and 15.5 million.
"Despite the cooldown this month,” forecast Gutierrez, “sales will remain on track to exceed 15.6 million units in 2013 because of strong product introductions from automakers."
That’s in line with projections by both J.D. Power and Associates and LMC Automotive, their joint forecast data indicating September slowed slightly from the industry’s sprint of recent months. Even so, the industry won’t go into the red on a retail level. Excluding fleet numbers, Power and LMC projected a 2 percent increase over September 2012. Total light-vehicle sales in September are expected to rise 4 percent.
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“Although the year-over-year sales gain in September is smaller than has been observed in recent months, it’s important to recognize that September sales are being heavily influenced by a quirk on the industry sales calendar,” said John Humphrey, senior vice president of the global automotive practice at J.D. Power.
Labor Day normally is counted by the industry in September; in 2013, it fell into August for a reporting purpose, automatically ensuring the current month wouldn’t show the benefit of traditional holiday sales.
J.D. Power estimates that more than 248,000 new vehicles were sold during the Labor Day weekend. Had those sales been included in September, LMC Automotive indicates they would have lifted the monthly SAAR and made it look like momentum was continuing to build.
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September’s numbers could show big gains by some makers and weak performance by others. Several manufacturers, among them Hyundai, Kia, General Motors, Ford Motor Co. and Chrysler Group, are reporting shortages of some vehicles despite the steady increase in production in North America.
Whether the slowdown marks a shift in the market or just a temporary aberration in the automotive recovery remains to be seen. In an interview with The Associated Press, Jim Lentz, Toyota's North American CEO, warned that so-called pent-up demand from buyers who postponed purchases during the worst of the Great Recession could begin to dry up in 2014, especially if the economy doesn’t improve at a more rapid pace.
"The market then has to work off a much better economy, an improving economy," Lentz said. "If we don't have that, I think the market may flatten out."
First published September 30 2013, 9:53 AM