Analysts predicted what first looks like “terrible news” for the auto industry, in forecasting U.S. auto sales for the month of September.
That is, sales over the long Labor Day weekend counted towards the monthly total for August this year instead of September, like last year. Statistically, that magnified the drop in September sales, year over year. Still, even controlling for the bump in the calendar, September sales are expected to decline.
For shoppers, that drop in September sales could be positive in a way, since it puts more pressure on automakers to offer more generous incentives. Affordability is an obvious issue for the U.S. auto industry, with auto loans and monthly payments at or near record levels.
Ford dealership in California.
In a joint forecast, J.D. Power and LMC Automotive said on Sept. 27 they expect September auto sales of about 1.2 million, down about 13% from a year ago. Separately, Cox Automotive made a similar forecast predicting U.S. auto sales would be down 14%. That would be much slower than auto sales year to date. Cox Automotive estimated U.S. auto sales year to date through September would be down just 1.6%.
It’s going to look like, “terrible news next Tuesday,” said Charlie Chesbrough, Cox Automotive senior economist. Automakers in the U.S. market report third-quarter sales including September on Tuesday, Oct. 1.
“We are going to see a decline in volume. That is inevitable,” Chesbrough said in a Sept. 26 conference call. “But the adjusted number is not so bad.”
That is, Cox adjusted the year-over-year comparison, accounting for the fact that there were 23 “selling days” in September 2019, vs. 25 days in September 2018. On an average sales per day basis, the predicted decline is still 6%.
Chesbrough said an uptick in incentives is likely, especially at year end, as automakers try and improve their yearly numbers.
For the third quarter, J.D. Power and LMC predicted U.S. auto sales would be flat vs. the third quarter of 2018, at around 4.3 million units. That would be a bit of an improvement compared with the first half of 2019, in which U.S. auto sales were down 1.5%, the research and consulting firms said.
Cox Automotive had a similar forecast of 4.3 million for the third quarter. Cox said that was virtually flat vs. a year ago, down about 0.4%. For all of 2019, Cox predicted U.S. auto sales of 16.8 million, down 2.4% from 2018.
