Car sales soaring, but slowdown on the horizon

Car buyers set a record through the first half of 2016, but will the pace continue?

With over 17 million all-new vehicles sold in the U.S. last year – a record-high, according to Kelley Blue Book – it would take unprecedented purchase volume among consumers to top last year's surge in automotive buying. Through the first half of the year, however, it's on pace to do that very thing, according to newly released sales statistics.

Between Jan. 1 and June 30, an estimated 8.7 million new-car sales were purchased nationally, according to separate KBB data. In June specifically, preliminary numbers find that 1.5 million automobiles sold, making the first half of 2016 one for the record books.

Selling at an especially feverish pace thus far this year are Subarus, with models, on average, snapped up less than a month after first gracing showroom floors, according to Tim Fleming, Kelley Blue Book Analyst. He added that purchase activity could very well be even higher were it not for limited inventory, as people have been buying faster than the automaker has made models available.

Growth slowing down?

Will car sales continue to surge as the summer rolls along? Not necessarily, according to Fleming.

"As we head into summer, sales should stabilize just slightly ahead of last year's pace," Fleming explained. "This month's volume will mark the highest June since 2005, when 1.67 million units were sold during a wave of discounts."

It's the dip in discounts – traditionally offered during holidays like Memorial Day and the Fourth of July – that experts say may lead to a slowing of transactions. For some domestic automakers, the sales slide has already been apparent. General Motors, for example, saw sales fall approximately 1.5% in June, according to The Wall Street Journal. Meanwhile, retail sales moved slightly higher, up by 1% from a year earlier. Toyota registered a more precipitous decline, down 5.6% after selling 198,257 units.

Ford sales solid

If there is an industry-wide slowdown in car sales growth this summer, it will be news to Ford Motor Company, which sold 239,096 models in June on a year-over-year basis, continuing its banner year.

Jeff Brown, of Brown's Ford dealerships in New York, told the WSJ that sport-utility vehicles are selling like proverbial hot cakes.

"We cannot get enough Escape [SUVs]," Brown explained, indicating that SUV sales have been on a tear for well over a year now, with last summer being "one of the best summers we had in 50 years."

Recent analysis from Kelley Blue Book confirmed more Americans purchase SUVs thanks to improved affordability and fuel efficiency, among other incentives. As for June and Ford specifically, the domestic automaker witnessed growth in sales for F-Series models and the Explorer, among others.

Michelle Krebs, AutoTrader Analyst, indicated that as impressive as sales were in June, it wasn't as widespread.

"What we're seeing in June car sales is what we've predicted for some time," Krebs told the WSJ. "The hefty year-over-year increases are narrowing, which is expected after this unprecedented long stretch of gains."

Low interest rates improving affordability

Meanwhile, the financing climate has remained highly affordable. In the first quarter, only 1 percent of auto loans were seriously delinquent in the U.S., according to estimates from credit reporting agency TransUnion. Serious delinquency in the automotive realm is defined as payments that are overdue by two months or more.

So will summer sales push 2016 to the new league leader in automotive buys, or will the projected slowdown enable 2015 to maintain its lofty position? As the old saying goes, only time will tell.