According to data from J.D. Power and LMC Automotive, utomakers’s US stimulus spending is expected to fall for the first time since the beginning of 2014, although there is a forecast that the overall new car demand in the July and the second half will be weakened.
J.D. Power/LMC, Edmunds and Cox Automotive show predict that the sales volume of cars and light trucks in the United States will be flat or down in July. This will be a year-on-year decline of third months in 2018.
The forecast for July is more diversified than ever and requires seasonally adjusted annual sales of 16 million 100 thousand to 17 million 100 thousand. The 16 million 100 thousand SAAR as the J.D. Power/LMC project will be the lowest record since February 2014. Anywhere in this area will be less than 17 million 470 thousand in June.
Although U.S. employment growth and consumer confidence remain high, rising gasoline prices and interest rates are expected to hold back economic growth in the second half of the year.
Slowing down expectations
“Sales in July look quite strong,” Edmunds industry analysis manager Jeremy Acevedo (Jeremy Acevedo) said in a statement. “But we are beginning to see signs of slowing down on the road ahead.” “As market factors such as rising interest rates deter consumers, we expect strong sales to continue to slow down in the first half of this year.”
Cox analysts are most optimistic, calling for flat sales in July 2017. The Cox Automotive (Cox) said rising interest rates and reports about a rise in the price of a car if a tariff on imports could lead to a rise in car prices did not drive away buyers.
Charlie Chesbrov, a senior economist at Cox, said in a statement: “in fact, the threat of rising prices may be pushing more shoppers into the showroom.”
But Geoff Schuster (Jeff Schuster), an analyst at LMC, says the tariffs that the Trump administration may impose on the car market and the economy as a whole pose a considerable threat. He said it would be difficult for automakers to find customers for the rest of the year after new car sales exceeded expectations in the first half of 2018. J.D. Power/LMC estimates show that overall sales in July dropped by 6% compared with the same period last year, while retail sales fell by 7.1%.
Tariff “risk factors”
“The expected performance in July is consistent with this idea,” Schuster, president of LMC’s U.S. operations, said in a statement. For the US and global markets, short-sighted tariff and retaliatory measures are the most important risk factors. In fact, a substantial increase in tariffs may undermine the strong economic growth of the United States, and even lead the market into a recession ahead of schedule.
Auto makers are scheduled to release us sales figures for July on Wednesday. The sales day in July of this year was one day lower than that of last year. In the first half of this year, the delivery of new cars and light trucks increased by 1.9%, and in 2018, SAAR sales reached 17 million, and in May, the number was only slightly below that level.
“Although disappointing retail sales have fallen again, it is important to remember that only 24 days of sale in July this year, the least month since 2012, a weekend less than last year,” said Thomas Wang, the senior vice president J.D. Power’s data and analysis department. “More noteworthy is that incentive spending is expected to decline for the first time in 54 months.”
Kim said that the reduction of incentives is a positive signal for the health of the industry, but it may not last too long. He said that if auto manufacturers see the demand continue to slide, the discount in the coming months may increase.
According to Cox and Edmunds, GM, FCA, and Volkswagen will gain market share in July, while TOYOTA and Nissan are expected to lose market share. Cox called for Ford Motor Co. at the expense of the interests of the American Honda Motor Company (American Honda), and the Edmonds (Edmunds) forecast was the opposite.