Auto Market Weekly Summary

The peak in daily new COVID-19 cases was seven weeks ago. Hospitalizations and deaths have been declining as well. However, outbreaks on college campuses caused daily cases to stop declining last week.

The jobs recovery continues, but the pace of recovery is slowing as each week we lose jobs as well as see recovered jobs. The headline unemployment rate fell to under 10%, but the share of unemployed that have been permanently separated has grown.

Consumer sentiment improves: Consumer sentiment has been slowly improving for the last five weeks as COVID-19 cases started to decline, and employment has grown. Consumer sentiment is at its highest level since March 21.

August vehicle sales: August new-vehicle sales were solid, but momentum appears to be slowing. August sales were solid as measured by the SAAR, which rose to 15.2 million vehicles. That was down from last year’s 17.1 million but an improvement from July’s 14.6 million. There were many caveats, however. The timing of Labor Day weekend last year fell in August; this year, it is in September, which made the seasonal adjustment more favorable. This August had two less selling days than last year, Hurricane Laura disrupted sales in its path over a weekend, and inventory remains critically low. So, judging the recovery is more difficult.

Comparing year over year, sales declined in total, in retail and in fleet and lost momentum from July in all three categories. August new vehicle sales were down 19% from a year ago. In July, sales were down 12%.

Combined sales into large rental, commercial, and government buyers were down 51% from last August, as the fleet sales trend worsened in August. Sales into commercial fleets declined and were down 17% compared to down 6% year-over-year in July. Retail sales were down 15% from a year ago, leading to an estimated retail SAAR of 14.0 million, down from 14.9 million last August but up from July’s 13.4 million rate.

For the year through end of July, new vehicle sales are down 21%, fleet sales are down 44%, and retail sales are down 17%.

Inventories low: New-vehicle inventories came in about 2.5 million units, according to Motor Intelligence. Days’ supply for August was 50, down 11 days year over year and down four days from July. Average car days’ supply came in at 51, down two days year over year and down four days from July. Light truck days’ supply was 49 last month, down 15 days from last year and down four days from July.

The Q3 Cox Automotive Dealer Sentiment Index and the August Manheim Used Vehicle Value Index will be published today. Check back on Smoke on Cars tomorrow for a video that will include updated data.