Summer Is Heating Up New-Vehicle Sales and Fueling Record Consumer Spending
By Jeff Youngs, July 25, 2014
Sales of light vehicles in the United States continue to rise, according to a monthly sales forecast developed jointly by J.D. Power and LMC Automotive. The forecast anticipates that total and retail light-vehicle sales in July 2014 will reach their highest levels for any July since 2006.
New-vehicle retail sales in July 2014 are projected to reach 1.2 million units, an increase of 5% over July 2013 on a selling-day adjusted basis. (July 2013 had 1 less selling day than July 2014). New-vehicle retail transaction prices in July 2014 average more than $29,000--the highest level ever for the month of July.
"The industry continues to demonstrate healthy growth, not just with retail-sales volume, but also with transaction prices," said John Humphrey, senior vice president of the global automotive practice at J.D. Power. "The combination of high transaction prices and strong retail-sales volume is expected to result in consumers spending more than $36 billion on new vehicles in July. That would be the highest for the month of July since 2005 and an increase of $3 billion from July 2013."
This latest forecast makes an upward revision of the previous forecast, predicting that the sales pace for the remainder of the year will average 16.5 million units (similar to the levels in March through July) and that retail light-vehicle sales will reach 13.5 million units, up from the previous forecast of 13.4 million. Total light-vehicle sales for calendar 2014 are projected at 16.3 million units, up from 16.2 million.
Several smaller, more affordable car and SUV models have upgraded sufficiently to be classified as premium vehicles in 2014, and, therefore, vehicles in the premium segments overall are expected to outpace those in the non-premium segments. Specifically, the Small Premium Car segment is expected to post the strongest year-over-year growth rate, with volume reaching nearly 80,000 units, doubling 2013 sales.
"The automotive industry recovery in the United States, which has had two upward revisions in the last two months, remains ahead of that of the U.S. economy, which has been revised down to less than 2% for 2014," said Jeff Schuster, senior vice president of forecasting at LMC Automotive. "Further upward momentum in light-vehicles sales remains a strong possibility if the remainder of the year keeps pace with recent months and the expected improvement level in the overall economy is realized."