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Smoke on Cars

Auto Market Weekly Summary


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Article Highlights

  1. COVID-19 cases set new peaks.
  2. Consumer sentiment declines.
  3. Vehicle sales improves; inventories are tight

We continue to see new peaks in daily COVID-19 cases reported in the U.S., a trend likely to continue through most of July even assuming that new restrictions are effective in curtailing the growth in cases.

The economic recovery can be seen in pending home sales in May, new vehicle sales in June, and 4.8 million jobs recovered in the June employment report. However, that report was based on employment as of June 13. Unemployment claims continue to be over 1.4 million each week since that time. Continuing claims actually increased in the latest data and show 19.3 million on unemployment benefits, which represents 12.7% of February’s job total.

Consumer sentiment declines: Consumer sentiment has been trending down since mid-June. Our leading indicators point to mostly positive trends in the auto market in June. We observed slowing momentum at the end of the month.

June car sales improve: June total new vehicle sales were down 27% compared with a year ago, with one less selling day compared to June 2019. The June seasonally adjusted annual rate (SAAR) came in at 13.0 million, a decrease from last year’s 17.2 million but an improvement from May’s 12.3 million.

Fleet down most: Combined sales to large rental, commercial and government fleet buyers dropped 69% from a year ago. Retail sales were down 17% from a year ago, leading to an estimated retail SAAR of 12.0 million, down from 14.0 million last June but up from May’s 11.8 million rate. For the first half, fleet sales are down 44% while retail sales declined 19%, as the overall new vehicle market is down 23%.

Vehicle inventories tight: Stronger sales in June has left supply low. New-vehicle inventories came in under 2.6 million units. Days’ supply for June was 58, down 9 days from a year ago and down 4 days from May. Average car days’ supply came in at 61, up 5 days from a year ago and down 4 days from May. Light truck days’ supply was 57 last month, down 15 days from last year and down 4 days from May. Average incentive spending came in at $4,090 per vehicle, up 7% from a year ago but down 2% from May.

Looking ahead: Growing cases of COVID-19 threaten the recovery. June saw solid growth jobs and vehicle sales, but a slowdown in activity could threaten further job recovery. July auto sales could be hit by unemployment that is higher than worst point in great recession and low supply.

Check back on Smoke on Cars tomorrow for a video that will include updated data.

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