Cox Automotive Forecast: Low Inventory, Economic Uncertainty Hold Back July Auto Sales
Tuesday July 28, 2020
- Annual vehicle sales pace in July forecast to be 13.3 million, down from 16.9 million in 2019.
- Sales volume expected to fall 19% from year-ago levels, finish near 1,130,000 units.
- Industry’s recovery is slow but remains on track with third straight month of improvement.
ATLANTA, July 28, 2020 – The vehicle market is expected to show modest month-over-month improvement in July, but the growing number of COVID-19 cases and overall economic uncertainty continue to stifle a more robust recovery. According to a forecast released today by Cox Automotive, the seasonally adjusted annual rate (SAAR) of auto sales in July is expected to be 13.3 million, up from last month’s 13.0 million pace, but down from last year’s 16.9 million level. Sales volume in July, forecast at 1.13 million units, will be down 19% from July 2019.
According to Charlie Chesbrough, senior economist at Cox Automotive, “The market has been making slow but steady gains since April’s low, but there are many headwinds hampering our recovery.”
Consumer sentiment for the most part drifted downward throughout the month of July as surges in COVID-19 cases in the South and the West dominated the news headlines. Concerns over high unemployment, a troubled U.S. economy and the resulting severe recession also weighed heavily on potential auto buyers, keeping many out of the market. Shoppers who stayed in market were likely impacted by a limited supply of product at dealerships, as tight inventory has become a growing problem for both new and used vehicles.
Inventory is a Key Metric in July
Based on Cox Automotive analysis of vAuto Available Inventory data, there was only 67 days of inventory available in mid-July based on the current sales pace—far below the July 2019 level of 86 days. Lean supply can be a positive for dealers and automakers, as it often leads to less aggressive incentive spending and high grosses. However, low inventory will also drive down market volume, as vehicle shoppers may not find the product they want. Many will decide to wait rather than compromise on color or trim package.
Not all automakers were in the same inventory situation in July though, and certainly inventory issues are impacting products and locations differently. Toyota and Subaru had the tightest inventory among larger brands in July, both below 40 days of supply. At the other end of the scale, Chrysler, Dodge and Ford all had days of supply above 90 days in July. Mitsubishi had the most inventory on hand in July, with 135 days of supply. Among luxury brands, Lexus in July had the tightest situation at nearly 41 days of supply while Buick and Jaguar were near 130 days.
Inventory levels also varied greatly across the country during the month, as the COVID-19 pandemic impacted states and regions differently. Some parts of the country registered plenty of inventory while other regions had very limited supply. Among the largest metro markets, New York dealt with the tightest supply situation in July with only 54 days of inventory at mid-month. Many markets in the South, on the other hand, had more than enough inventory, with Dallas-Fort Worth at 72 days and Houston at 85 days. In Corpus Christi, Texas, available inventory stood near 100 days’ supply.
July 2020 Sales Forecast Highlights
• In July, new light-vehicle sales are forecast to fall to 1.13 million units, down nearly 19% versus July 2019. Compared to June, sales are expected to rise nearly 27,000, or nearly 2%.
• The SAAR in July 2020 is estimated to be 13.3 million, far below last year’s 16.9 million level, but an improvement from last month’s 13.0 million pace.
• There are 26 selling days in July 2020, one more than July 2019.
About Cox Automotive
Cox Automotive Inc. makes buying, selling, owning and using 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 countries 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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