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Auto Sales Expected to Maintain Strong Pace in November

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Article Highlights

  1. November sales pace expected to be in line with year-to-date average of 17.1 million units.
  2. New-vehicle sales expected to be 1.36 million units, down 2.6 percent from November 2017.
  3. The seasonally adjusted annual rate (SAAR) forecast to be down from October’s 17.5 million level, but still above the healthy 17-million mark.

ATLANTA, Nov. 28, 2018 – According to a forecast released today by Cox Automotive, the new-vehicle sales pace in November is expected to be 17.1 million units, a decrease from October’s strong 17.5 million level, but on pace with the market’s 2018 overall average.

“The market continues to outperform our earlier forecast with expected headwinds being offset by other market factors,” said Charlie Chesbrough, senior economist at Cox Automotive. “Looking ahead, affordability concerns – attributable to increasing interest rates, weakness in home construction and volatility in the stock market are growing headwinds to watch. However, sales in 2018 will be above 17 million, which is a very strong market indeed. How long this pace continues is the key question.”

Year-over-year comparisons for November will provide a clearer picture of the market’s strength as we approach the end of 2018. The number of selling days is unchanged from last November at 25, and the nearly full week of sales after the Thanksgiving holiday in both years allows for a solid comparison.

According to Chesbrough, “Some of the strength in the market in recent months may be due to pull-ahead sales from buyers concerned about higher prices from steel and aluminum tariffs already in place, the threat of additional tariffs, and rising interest rates.”

For vehicle shoppers, November is traditionally a hot month. The sales pace over the last three years has averaged a very-strong 17.6 million, including the all-time November pace record of 17.9 million in 2015. Vehicle buying has been particularly strong in the fourth quarter the last few years as shoppers gobble up the year-end deals. Beating the all-time record pace for November is possible; however, sales volume would need to exceed expectations by nearly 70,000 units.

Key Highlights for November 2018 Sales Forecast:

  • In November, new light-vehicle sales, including fleet, are expected to reach 1.36 million units, down nearly 35,000 units, or nearly 2.6 percent, compared to November 2017, but remain nearly flat from last month’s 1.36 million sales.
  • The SAAR in November 2018 is estimated to be 17.1 million, down from last month’s 17.5 million level, and down from last year’s 17.5 million pace. The pace this month is in line with the 2018 year-to-date average of 17.1 million units.
  • The record November SAAR occurred in 2015 when the pace reached 17.9 million, while the record volume occurred last year when sales reached 1.39 million. Record sales volume is possible this month, although because of seasonal adjustments, a record sales pace is more difficult to achieve.
  • While the market, and buying conditions in general, are strong, risks are also rising. Federal Reserve monetary policy of increasing interest rates, up nearly 200 basis points since 2015, are negatively impacting vehicle affordability. Additional interest rate hikes are expected which will cause buyers’ monthly payments to increase. Tariffs on steel and aluminum have added about 1 percent to the price of a vehicle, and President Trump is considering additional levies. And, previous years of aggressive leasing is now creating a major headwind – millions of gently-used, high-content vehicles have been returning to dealer lots. Off-lease vehicle volume is expected to peak in 2019, and many potential new-vehicle buyers will be drawn to this value alternative.

Weak Car Sales Expected to Drop Ford and Nissan Double-Digits for Year

Strength in Jeep brand should help lift FCA to a strong showing while weakness in car segments is likely to negatively impact Ford, Honda, Nissan and Toyota.

Sales Forecast1 Market Share
  Nov-18 Nov-17 Oct-18 YOY% MOM% Nov-18 Oct-18 MOM Nov-17
GM 235,000 245,387 242,000* -4.2% -2.9% 17.3% 17.8% -0.5% 17.6%
Ford Motor Co 185,000 210,205 191,682 -12.0% -3.5% 13.6% 14.1% -0.5% 15.1%
Toyota Motor Co 185,000 191,617 191,102 -3.5% -3.2% 13.6% 14.0% -0.4% 13.7%
FCA Group 180,000 154,919 177,391 16.2% 1.5% 13.2% 13.0% 0.2% 11.1%
American Honda 122,000 133,156 122,182 -8.4% -0.1% 9.0% 9.0% 0.0% 9.5%
Nissan NA 115,000 135,985 109,962 -15.4% 4.6% 8.5% 8.1% 0.4% 9.7%
Hyundai Kia 103,000 101,513 98,127 1.5% 5.0% 7.6% 7.2% 0.4% 7.3%
VW 53,000 53,957 49,873 -1.8% 6.3% 3.9% 3.7% 0.2% 3.9%
Subaru 56,000 51,721 55,394 8.3% 1.1% 4.1% 4.1% 0.0% 3.7%
Grand Total2 1,360,000 1,396,138 1,360,776 -2.6% -0.1%        

 

1 November 2018 Cox Automotive Industry Insights Forecast; all historical data from OEM sales announcements
2 Total includes brands not shown
* GM monthly sales are estimated

 

Most car segments should see double-digit declines from last year as consumers continue to shift toward crossovers. A big question mark is how will pickup trucks perform. New products from GM and Ram coupled with discounting of the previous version should lift sales. However, weakness in home construction and high transaction prices are likely to weigh sales down.

Sales Forecast1 Market Share
Segment Nov-18 Nov-17 Oct-18 YOY MOM Nov-18 Oct-18 MOM Nov-17
Mid-Size Car 110,000 129,344 119,663 -15.0% -8.1% 8.1% 8.8% -0.7% 9.3%
Compact Car 125,000 153,190 143,524 -18.4% -12.9% 9.2% 10.5% -1.4% 11.0%
Compact SUV/Crossover 255,000 228,535 260,582 11.6% -2.1% 18.8% 19.1% -0.4% 16.4%
Full-Size Pickup Truck 205,000 206,363 206,466 -0.7% -0.7% 15.1% 15.2% -0.1% 14.8%
Mid-Size SUV/Crossover 210,000 187,976 210,646 11.7% -0.3% 15.4% 15.5% 0.0% 13.5%
Grand Total2 1,360,000 1,396,138 1,360,776 -2.6% -0.1%        

 

1 Cox Automotive Industry Insights data
2 Total includes segments not shown

 

Although overall year-to-date light-vehicle sales are basically flat compared to last year, the market in 2018 has been very different. Fleet sales in 2018 have been higher versus 2017, generally off-setting lower retail volumes. The product mix is different as well, with light truck sales up 8 percent over last year or 730,000 units. Car sales, on the other hand, are down 13 percent from last year, or 675,000 units, and these declines are keeping the overall vehicle market on a much slower pace. This has been a major trend for the last few years and is likely to continue. Car share in 2015 averaged 43 percent of all vehicle sales and has fallen steadily to 31 percent so far in 2018.

Where the bottom is for car segments’ share of sales is still unknown. Recent months continue to show double-digit declines from prior year sales. However, there are changes within the used market that may alter new cars’ sales trends. Auction prices for used cars have been declining for years due to consumers’ preference for CUVs, and an over-supply of off-lease cars. Inexpensive competition from used cars have contributed to the collapse in new-car demand. However, used-car prices are now rising and at a quicker pace than some other used segments. As a result, used cars are not quite the bargain they were earlier in the year and some car segment buyers may decide to buy new instead of used.

All percentages are based on raw volume, not daily selling rate.

Cox Automotive Monthly Sales One-on-One Interviews

Cox Automotive is organizing one-on-one interviews with our industry experts on Monday, December 3. Analysts will be available to answer questions and provide insights on the results as they come in. Written commentary will be published and distributed as usual by 11:15 a.m. EDT on sales day.

About Cox Automotive

Cox Automotive Inc. makes buying, selling and owning cars easier for everyone. The global company’s 34,000-plus team members and family of brands, including Autotrader®, Clutch Technologies, Dealer.com®, Dealertrack®, Kelley Blue Book®, Manheim®, NextGear Capital®, VinSolutions®, vAuto® and Xtime®, are passionate about helping millions of car shoppers, 40,000 auto dealer clients across five continents and many others throughout the automotive industry thrive for generations to come. Cox Automotive is a subsidiary of Cox Enterprises Inc., a privately-owned, Atlanta-based company with revenues exceeding $20 billion. www.coxautoinc.com

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