July was a mixed bag for auto sales. Though most manufacturers reported increases above their paltry 2009 figures, the abundance of available incentives designed to lure would-be car buyers didn't prompt the spectacular sales boost that was expected.
But with half of August now history, it appears the month known for its dog days will be better than July, Edmunds.com reports. If vehicle sales continue at current pace, August sales are expected to total about 1.03 million units, which equates to a seasonally adjusted annual rate of about 11.8 million units, according to data compiled by the online car-buying guide. Analysts expect auto sales for the year will total 11.5 million to 12 million, better than last year, but still well below those earlier in the last decade.
August could be so good, in fact, that it may supplant March as the best sales month so far this year.
Edmunds' analysis assumes that fleet sales are relatively steady as a percentage of total vehicle sales compared to last month. Fleet sales have accounted for a larger chunk of many automakers' sales this year, as rental-car companies and other fleet buyers bought new cars and trucks to freshen their aging fleets.
"A Bargain-Driven Market"
Fleet sales at General Motors, for example, rose 48% in July compared to a year ago, the company reported earlier this month. During the first six months of the year, fleet sales contributed about a third of all GM's vehicle sales. GM and other manufacturers expect that fleet purchases will make up a smaller percentage of sales as the 2010 model year winds down.
But it isn't merely wholesale buyers who are pushing up auto sales. Consumers in search of bargains are also driving August sales higher. "It looks like bargain-hunters are getting serious about taking advantage of the model year-end deals," Edmunds.com CEO Jeremy Anwyl noted in his Just to Clarify blog. "But this is a bargain-driven market, so as the deals dry up, sales will likely trend down from here."
Based on the first two weeks of data for August, Edmunds.com senior analyst Ray Zhou expects sales to rise most dramatically at German luxury make BMW -- up 22% compared to July. Ford Motor (F), Honda Motor (HMC), Mercedes-Benz and Volkswagen sales may climb 7% to 8%. Those at GM and Nissan Motors (NSANY) are actually expected to fall about 6% to 7%, particularly surprising since Nissan reported one of the biggest month-to-month sales increases in July: 28.5%. Edmunds expects all other automakers' sales will be steady compared to last month.
Current-month sales will also be competing against those recorded during last year's government-sponsored "cash-for-clunkers" program, which made August one of the best auto sales months in 2009.
So far this August, Edmunds.com's monitoring of vehicle retail transactions show some increase from last month, beyond the seasonal norm. But July car sales were underwhelming in light of the abundant incentives available, it said.
Learn the most important step in structuring an investment portfolio.View Course »