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July Auto Sales Stoke Fears of Market Plateau

The auto industry’s recovery has been a bright spot for the U.S. economy, with high factory utilization spurring new jobs, investment in American facilities and wage growth for Detroit’s auto workers. Car buyers spent $49 billion on light vehicles in July, according to TrueCar Inc., up 1% amid longer loan terms and a boom in subsidized auto leases—trends that keep monthly payments on par with a decade ago even as sticker prices go up.

Overall retail sales are a trouble spot as purchases made by individual customers in showrooms have stalled this year, down slightly for the first seven months, according to J.D. Power. Auto makers are betting sales to government agencies, rental-car firms and commercial fleets will continue to grow.

Michael Robinet, an IHS Automotive auto analyst, predicted continued sales momentum in 2017, but his forecast comes with a catch. He said sales gains will need to be fueled by robust sales incentives and cheap credit. If those factors collapse, demand will hit a rut.

Jeff Schuster, an analyst with LMC Automotive analyst, said “there are some warning signs out there,” calling for another slowdown in August. He urged industry executives and others gathered at a jammed-packed Center for Automotive Research conference in Traverse City, Mich., to look on the bright side.

Among German auto makers, BMW AG’s U.S. sales fell 5% to 30,551 vehicles, while Daimler AG’s Mercedes-Benz USA unit reported a 3.6% rise to 28,523. Volkswagen AG said its U.S. sales fell 8% to 28,758, and Audi AG, the luxury-car maker owned by Volkswagen, said its July sales in the U.S. rose 4% to 18,364.

July Auto Sales Stoke Sales of market Plateau

Credit: WSJ

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