Market analysts are predicting that June will be another strong month for the recovering US light vehicle market, driven by retail sales.
JD Power says that retail sales are continuing their positive trend in June, with no signs of letting up at the start of the summer selling season. It says that new vehicle retail sales in June are projected to come in at 1,118,800 vehicles, which represent a seasonally adjusted annualised rate (SAAR) of 13.2m units, a healthy increase of 500,000 from the May SAAR.
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JD Power also notes that while sales overall are strong, not all segments are selling at the same pace. Sales of premium vehicles account for just 11.7% of new vehicle retail sales so far in June, down from 12.9% in June 2012. It says the under-performance of premium light vehicle sales is largely due to the age of the models in these segments. JD Power calculates that the average age – the number of months the vehicle has been in the market since it was introduced or redesigned – of premium models sold in the second quarter of 2013 was 43 months. In comparison, the average age of non-premium models – excluding pick-up trucks – is only 34.5 months.
JD Power expects that by the second quarter of 2014, the average age of premium products will fall to just 33 months, as new and redesigned products enter the marketplace.
JD Power says the strong selling pace continues to be matched by strong transaction prices. Thus far in June, the average transaction price of new vehicles is USD28,900 – the highest ever for the month of June, JD Power says.
“Although the premium segment growth has lagged non-premium, there is some good news for the industry in that the average price of premium vehicles in June is $47,000, up almost 4 percent from June 2012,” said John Humphrey, senior vice president of the global automotive practice. “New premium vehicles entering the market late this year will also help bolster sales through the second quarter of 2014.”
JD Power says that total light vehicle sales in June 2013 are expected to grow by 12% from June 2012 to 1,380,800 units. Fleet sales in June are just 19% of total sales and fleet volume for the month is projected at 262,000 units. The total light vehicle market SAAR for June is estimated at 15.7m units, which compares with 15.2m units in May 2013 and 14.4m units in June 2012.
LMC Automotive continues to hold the outlook for total light vehicle sales in 2013 at 15.4m units, but has increased its forecast for retail light vehicle sales to 12.6m units from 12.5m, as retail sales growth expands.
“There is little question that the automotive market has strong momentum as we close out the first half of 2013,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “Looking forward, all the key fundamentals are in alignment to continue the current growth trend, with production capacity limitations being the only major visible risk.”
Kelley Blue Book’s analysts put the June SAAR at 15.5m units, which it says is the highest SAAR since November 2012 and highest June SAAR since 2007 at 15.8m.
“We’ve had a strong first half of the year with new car sales up nearly 7% compared to the first half of last year,” said Alec Gutierrez, senior market analyst of automotive insights for Kelley Blue Book. “The industry continues to benefit from modest improvements in housing, unemployment and consumer confidence.”
KBB says that demand remains strong for large pick-ups and compact utility vehicles, both of which are expected to be up nearly 20%.
“Compact crossovers will capture more market share than ever before at 13 percent, fueled by recent redesigns of the Ford Escape, Honda CR-V and Toyota RAV4,” said Gutierrez. “Sales in the mid-size segment are expected to be relatively flat year-over-year; however, the fight for segment supremacy remains fierce.”
