With less than a week left in September, typically one of the busiest months of the year for car buying, we’ll soon know how the industry performed and whether buyers took advantage of discounted offers from dealers looking to move 2015 models to make way for next year’s crop of cars.
And if August is any indication of what’s to come, it could be a banner month for the automotive industry.
The U.S.’ “Big Three” auto manufacturers – Ford Motor Co., General Motors, and Chrysler – all reported surprisingly robust August sales, fueled by incentives offered by dealerships as well as affordable financing. Ford had its best August in nine years, moving nearly 234,250 vehicles altogether, an increase of 5 percent on a year-over-year basis.
Sport-utility vehicle sales were particularly solid, as the Dearborn, Michigan-based automaker had its best SUV sales month since 2003. Fiat Chrysler, meanwhile, posted a sales increase of 2 percent, buoyed by higher traffic for Jeep SUVs, as noted by Reuters.
Sales for GM weren’t quite as strong, but the No. 1 automaker’s slide was modest at best, with sales down a mere 0.7 percent.
Jeff Schuster, senior vice president of forecasting for the research firm LMC Automotive, told Bloomberg that the economy may be showing signs of weakening, but that’s not apparent in consumer interest for cars.
“The market is down but consumers don’t seem to care,” Schuster explained. “They seemed to shrug it off.” He added that if conditions stabilize – as many economists expected them to – then “we should have a really robust September.”
Transaction prices rise in August
Transaction prices increased during the month thanks to greater demand – actually beating economists’ predictions in the process. The estimated average transaction price for light vehicles in the U.S. was $33,500 in August, vehicle valuation firm Kelley Blue Book reported. That’s up 3.4 percent from last year, but down slightly from July.
Akshay Anand, KBB.com analyst, noted that September’s results will largely hinge on Labor Day sales events, which are usually quite popular.
Buyers looking to finance their vehicles have been able to do so at an affordable interest rate. So much so that the auto loan delinquency rate is down to its lowest level in two years, according to credit agency TransUnion.
Oklahoma, Illinois lead drop in auto loan delinquencies
According to TransUnion, delinquencies are loans that are 60 days overdue. More than 33 states saw delinquency rates decline in the second quarter, including Oklahoma and Illinois. Rates in those states were down 17 percent and 12 percent, respectively, when comparing April through June with the same span last year.
Just about every vehicle segment showed growth in August in terms of average transaction prices, but electric cars still aren’t resonating with the public like some automakers anticipated. KBB.com’s Anand noted that electric vehicle purchases dropped 3 percent in August versus July.
Anand speculated that shoppers still aren’t familiar enough with the technology to feel confident they’ll like a car that runs on electricity.