U.S. July auto sales best in ten years: 17.55 m. SAAR
Auto sales continued their relentless upward trajectory in July, thanks to readily available credit (and long loans), falling gas prices and seemingly unending pent-up demand. Light trucks continued to rule, constituting 56 percent of sales, up from 52 percent a year ago. (In the Washington area, car sales generally top trucks.) Last month saw the best July sales in a decade, with overall sales up 5.3 percent.
The second half of 2015 is off to a great start, with industry sales above expectations, said Kurt Mc Neil, General Motors U.S. vice president of sales operations.
The seasonally adjusted annual rate for new vehicle sales in July was 17.55 million, the fourth month this year where the SAAR was above 17 million. NADA Chief Economist Steven Szakaly forecasts year-end sales of 17.2 million. New vehicle sales in the U.S. have not reached 17 million since 2001.
GM sales were up 6.4 percent, even with its cutback in fleet sales. Chevrolet and Buick did especially well, up 7.8 percent and 18 percent, respectively. Ford sales rose 5 percent (with SUV sales up 11 percent) and Fiat Chrysler was up 6 percent, thanks to strong Jeep sales. Nissan and Honda saw sales rise nearly 8 percent, and Hyundai and Kia both set monthly sales records.
Good news for dealers: The average transaction price rose to $33,453, a 2.6 percent increase from a year ago, according to Kelley Blue Book. Vehicles spent an average of 62 days on dealer lots before being sold, the lowest monthly average since 2011, according to Edmunds.com.
On the credit side, July yielded the lowest APR, 4.38 percent, since last September. Average loans rose slightly to 68.1 months, meaning monthly payments were lower and consumers could afford a nicer car, Edmunds said. A full 13 percent of buyers who financed their new car purchase got a 0 percent APR.
Greg Gardner of the Detroit Free Press notes three possible notes of caution: First, with more consumers getting longer loans, even seven or eight years, buyers could well be upside down when theyêre ready to trade. This was a problem many years ago, but many analysts think the situation is different now.
Second, leasing is now 28 percent of new-car retail transactions. That will mean more cars at auction in a few years, which will drive down used car prices. As new-car buyers find their trades are worth less, more will need to finance with longer loans, continuing the cycle.
Third, the Justice Department and some states are investigating the securitization of auto loans, especially those made to subprime borrowers. Although it has not reached the levels it did in the Great Recession, 8.3 percent of car loans in June were too risky for subprime borrowers, says Edmunds.Download Bulletin PDF