There may be all sorts of worrying signs about the economy but you could not tell that by visiting U.S. car showrooms. Sales of new vehicles in August are heating up, thanks to strong demand for trucks and crossover vehicles – and the ample availability of financing for even riskier buyers.
New-vehicle sales are expected to increase anywhere from 12 to 14 percent from August last year, according to analysts from Kelley Blue Book, J.D. Power & Associates and LMC Automotive. That could result in the highest monthly sales volume since 2006, as the seasonally adjusted annualized rate is expected to reach 16 million units.
“The industry as a whole continues to experience a robust improvement in demand, and our forecast for August is looking to be the best month for retail sales that we’ve seen in the past seven years,” said John Humphrey, senior vice president of the global automotive practice at J.D. Power.
“Moreover, this strong selling environment is occurring when consumers are spending more on new vehicles than any month on record, which is a further indication of the underlying strength of the economy.”
One factor that appears to be propping up demand is the availability of ready loans, with lenders opening up the spigot again to even higher-risk buyers. Data from Experian Automotive suggest that shoppers also are stretching out loans in order to purchase more well-optioned vehicles.
“Most automakers are seeing double-digit sales increases compared to last year as retail sales remain a bright spot, even with more new models entering the market,” said Alec Gutierrez, senior analyst at Kelley Blue Book.
Detroit makers have shown a strong rebound this year, with Chevrolet noting that its small car sales have surged substantially with the introduction of new models like the Spark minicar and Sonic subcompact. But domestic brands have also been buoyed by booming demand for pickups, the full-size segment having already gained 23 percent for the first seven months of 2013.
Gutierrez said the growth in the truck segment appears to have no end in sight. In addition to getting a push from the rebounding housing market, the auto industry is heading into the time of year where truck sales normally tend to ramp up. With seasonal demand predicted to increase during the next few months, Kelley Blue Book expects growth in the full-size pickup truck segment to continue unabated.
It’s hard to find any product niche that isn’t doing well, but the midsize car segment, which had many redesigned models introduced last year, is expected to be down nearly 2 percent in market share and is being challenged by compact cars for the top segment, said Tim Fleming, an analyst at Kelley Blue Book.
Based on the solid outlook for August, LMC Automotive is holding its full-year 2013 forecast for retail light-vehicle sales at 12.8 million units and total light-vehicle sales at 15.6 million units.
“The U.S. auto recovery seems to be operating on auto pilot, a welcome stage of stability at a higher pace,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive.
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