US light-vehicle sales decline 12 percent year-over-year in July
US light-vehicle sales are estimated to have dropped 12.2% year on year (y/y) to 1,227,420 units in July and decreased 21.8% y/y to 7,688,741 units in the year to date (YTD). The seasonally adjusted annual rate (SAAR) of US light-vehicle sales is estimated to be 14.1-14.5 million units in July. Although remaining well below the year-earlier levels, light-vehicle sales in July are expected to have improved from the month prior reading and reflect little immediate impact from rising counts of coronavirus disease 2019 (COVID-19) cases in some US regions.
Several automakers have moved to quarterly reporting of US sales. Along with the Detroit Three automakers, Audi, BMW, Daimler, Nissan, Porsche, and Volkswagen (VW) have shifted to quarterly reporting of US sales.
Outlook and implications
At the time of writing, the seasonally adjusted annual rate (SAAR) of US light-vehicle sales is estimated to be 14.1-14.5 million units in July, representing a meaningful improvement from the SAAR reading of 13.0 million units in June. The US sales figures for July reflect sustained retail sales levels and some modest recovery in commercial fleet activity. While there was concern regarding the rising number of COVID-19 cases in some US states during last month, this does not seem to be reflected in the new vehicle demand levels for the month. The outlook for the second half of the year remains opaque, but the consecutive monthly rises in auto demand levels from April's low SAAR reading of 8.7 million units indicates that consumers who are willing, ready and able to make a new car purchase are doing so. The estimated sales results for July lends some upside bias to the IHS Markit light-vehicle sales projection of 13.3 million units for full year 2020 as reflected in the July 2020 forecast release.
There were 26 selling days in July this year, one more than the year-earlier period. On a unit volume level, July sales are estimated to have climbed to approximately 1.22 million units, more than the month prior result of 1.11 million units, but down approximately 13% from the July 2019 volume level. Plenty of headwinds remain as we progress through the second half of the year, including potential inventory concerns, lack of fleet activity, still high unemployment, and potentially waning incentive levels, but monthly unit sales levels should remain above the million-unit mark for the remainder of the year.
North American auto production came to a standstill by mid-March, with most plants not coming back on line before mid-May, depending on region and automaker. By 8 June, all production in the US and Canada had resumed. Mexico saw most production resume by about 1 June, with the last two vehicle assembly plants back on line on 16 June. Stock management will be an important variable moving through the immediate forecast horizon and there could be some model-level pressures as the sales pace recovers. Month-end July inventory levels, as reported by AutoData, at the time of writing, were estimated to be down moderately from levels in the previous month. Compared to month-end June, July's industry inventory was down approximately 55,300 units. The days' supply reading at the end of July was 54 days' supply, down from a 58 days' supply level at the end of June.
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