Auto Sales Recovery Continues on Track in August

Auto Sales Recovery Continues on Track in August

As summer winds down in the last week of August, the auto industry's slow recovery appears to remain on track, at least for another month. According to a forecast released today by Cox Automotive, the seasonally adjusted annual rate (SAAR) of auto sales in August is expected to finish near 14.9 million, up from last month's 14.5 million pace. Sales volume in August, forecast at 1.30 million, will increase 7% from July.To get more auto finance news, you can visit shine news official website.

Compared to year-ago levels, however, vehicle sales in August are forecast to be down nearly 330,000 units. On the upside, seasonal adjustments for August suggest the volume drop isn't as noteworthy as it may appear. There were two additional selling days in August 2019, and the Labor Day holiday, usually a big sales weekend, was included in the August results last year, but not this year. Even though unadjusted sales are expected to decline nearly 20%, the adjusted volume will decline only about 12% from August 2019.

August is another step forward in the market's recovery, although the pace of sales improvement now appears to be slowing. According to Charlie Chesbrough, senior economist at Cox Automotive, "While the market continues to slowly improve, there are a number of factors preventing more robust gains. Limited inventory for some brands, as well as the ongoing high unemployment and low confidence from the pandemic, continue to keep sales from rebounding more quickly. There's been a noticeable pull-back in incentives as well. These problems will likely persist, at least in the near term."

Available inventory continues to plague much of the market and was the key story in August. Some brands were wrestling with significant shortages. Toyota, Lexus, and BMW all had less than 40 days of available inventory in the latter part of the month, far below the current industry average of 60.

"Obviously, you can't sell what you don't have," added Chesbrough. "The lack of inventory likely kept some potential buyers out of the market." Low inventory means less choice when it comes to vehicle color or trim package. It also means higher prices. Recent research from Cox Automotive notes nearly 20% of dealers have raised retail prices since the start of the pandemic. A similar percent of consumers admit they are putting the vehicle purchase on hold, waiting for a better deal.