(Multibagger) - U.S. New Vehicle Sales Surge Over 4% in August: What Investors Need to Know
According to a joint report released on Thursday by industry consultants J.D. Power and GlobalData, new vehicle sales in the United States are projected to rise by more than 4% in August compared to the same period last year. This increase is partially attributed to the inclusion of the Labor Day weekend within the reporting period.
On a seasonally adjusted annualized rate (SAAR) basis, which accounts for the timing of Labor Day, sales are expected to remain relatively stable at approximately 15.3 million units.
Why This Matters for Investors
Dealer and manufacturer discounts are on the rise, and average transaction prices are falling, contributing to a modest growth in SAAR for August. However, the automotive industry is also facing challenges from reduced leasing activity that occurred three years ago. The fewer leases signed back then mean fewer lessees are returning to dealerships to purchase or lease new vehicles.
J.D. Power has also forecasted slower-than-expected growth for electric vehicle (EV) sales in the first half of 2024, due to competition from gasoline-powered models.
Key Statistics
Total new vehicle sales for August, encompassing both retail and non-retail transactions, are expected to increase by about 4.2% to 1,437,954 units compared to the same period last year.
Average transaction prices are trending towards $44,039, which is a decrease of $1,895 from a year ago.
Total retailer profit per unit, which includes vehicle gross profit plus finance and insurance income, is projected to be $2,249. This represents a 33% decline from August 2023.
Expert Insights
"The transition to EVs will be gradual, influenced by several interconnected factors," said Elizabeth Krear, Vice President of Electric Vehicle Practice at J.D. Power.
"Global demand recovery is slowing, with lower volumes tempering the outlook for the rest of the year," added Jeff Schuster, Vice President of Research, Automotive at GlobalData.
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### Analysis for the Everyday Investor
**What's Happening?**
New vehicle sales in the U.S. have seen a significant increase of over 4% this August compared to the same month last year, thanks partly to the Labor Day weekend.
**Why Should You Care?**
1. **Discounts and Prices**: Dealers and manufacturers are offering more discounts, and the average price of new vehicles has decreased. This is good news if you're planning to buy a car soon.
2. **Leasing Impact**: Fewer people leased cars three years ago, which means fewer people are now returning to dealerships to get new leases or buy new cars. This affects the supply and demand dynamics in the market.
3. **Electric Vehicle Sales**: Despite the hype around electric vehicles (EVs), their sales are growing slower than expected. This indicates that gas-powered cars are still very much in demand.
**What Are the Numbers?**
- **Total Sales**: Expected to be 1,437,954 units, up 4.2% from last year.
- **Average Price**: Around $44,039, down by $1,895.
- **Profit per Unit**: Expected to be $2,249, a 33% drop from last year.
**Expert Opinions**
- **EV Transition**: This will take time due to various factors.
- **Global Demand**: Recovery in global demand is slowing down, affecting the outlook for the rest of the year.
**How Does This Affect You?**
If you're in the market for a new vehicle, now might be a good time to buy due to lower prices and higher discounts. However, if you're an investor, be aware that the automotive sector faces several challenges, including slower EV adoption and reduced global demand. This could impact the profitability and stock prices of car manufacturers and dealerships.