High interest rates that spooked some buyers, coupled with a weak fleet market, led to mixed results in July and a more modest-than-expected recovery following June’s cyberattacks on a major dealership management system.
U.S. light vehicle sales volume in July was estimated at 1.3 million, according to GlobalData, down 0.4% from a year ago. Cox Automotive, however, estimated volume closer to 1.27 million, down from its previous forecast of 1.29 million.
The estimated seasonally adjusted annualized sales rate rose to 16.1 million units, up from 15.3 million in June and slightly above last July’s pace, according to GlobalData.
Of the seven automakers that continue to report sales monthly, Mazda, Subaru, Hyundai and American Honda all posted gains. Toyota Motor North America’s sales fell 5.1%, while Ford Motor Co.’s fell 0.3%, Kia’s sales fell 10% and Volvo’s fell 11%. Other automakers that report U.S. sales do so quarterly.
“Expectations for the month of July were high. … On this occasion, it appears that July’s performance was disappointing, suggesting that the market may be losing some steam as we head into the second half of the year,” David Oakley, head of automotive forecasting for the Americas at GlobalData, said in a statement. “The holiday sales events around Independence Day also appear to have been relatively ineffective this year. High interest rates and stubbornly high prices are keeping some potential buyers away, while some OEMs are being hurt by recalls that prevent the sale of certain models.”
Among the top performers, American Honda said deliveries rose 8 percent to 120,737 vehicles powered by light trucks as well as hybrid variants of the CR-V and Civic that went on sale in July. Sales of the Honda brand rose 9.9 percent, while Acura fell 7.3 percent.
Mazda deliveries rose for the third straight month, up 30 percent to 39,866. The company said it was Mazda’s best July on record.
Subaru sales remained hot, rising 2.6%, driven in part by a 36% gain for the Crosstrek, which posted its best July ever, according to the company. Subaru hasn’t seen a monthly sales decline since July 2022, according to the Automotive News Research & Data Center.
Hyundai sales rose 4% to 69,202, led by a 50% increase in the Palisade crossover and a 79% jump in the Sonata sedan.
While vehicle prices remain historically high, average transaction prices were on track to fall 2.6%, or $1,166, to $44,271 starting in July 2023, J.D. Power and GlobalData said, as discounts increase. Just 14.5% of new vehicles sold above sticker price last month, down from 32.4% in July 2023, J.D. Power and GlobalData estimated.
Sales to commercial businesses, government agencies and daily rental companies were particularly weak in July, Oakley said, as dealers prioritized fulfilling backlogged retail orders following the June cyberattacks that crippled many dealership operations for nearly two weeks.
Fleet sales fell about 33% from the same period last year to about 152,000, or 11.7% of total sales, according to GlobalData.
Inventories of new cars and light trucks stood at 2.9 million in mid-July, Cox Automotive said, up 49%, or 966,000, from July 2023. Toyota Motor Corp., Honda Corp. and Subaru Corp. continue to have the lowest inventories, while Stellantis Corp. and Nissan Motor Co. have higher inventories.
Inventory growth is expected to slow in the second half of the year as some companies adjust production amid rising inventories.
The average incentive per new vehicle rose 52 percent from July 2023 to $2,892 last month, J.D. Power and GlobalData said. Spending on incentives, as a percentage of sticker price, was at 5.9 percent last month, up 1.9 percentage points from a year earlier.
“Some automakers are struggling to balance sales, production, inventory and incentive targets as the market returns to more normal dynamics than those experienced from 2020 to 2023,” said Joe Langley, associate director at S&P Global Mobility. “Our North American light vehicle production outlook for the remainder of this year has been lowered as automakers try to manage these factors.”
Overall growth is expected to slow in the second half after sales rose 2.2% in the first six months of 2024. Analysts say high interest rates and borrowing costs, as well as high prices, are stifling demand for new cars and light trucks. The prospect of interest rate cuts later in the year could help spur trading. The Federal Reserve left interest rates unchanged on July 31.
“While the Federal Reserve is signaling future rate cuts and the broader economy is headed for a soft landing, the prospect of a continued recession and vulnerabilities in certain sectors could materialize,” Jeff Schuster, vice president of automotive research and analysis at GlobalData, said in a statement. “Lower transaction prices and availability of affordable vehicles are crucial to reigniting growth in light vehicle sales. The outlook remains optimistic, albeit slightly easing over the next 18 months.”
David Phillips, Carly Schaffner and Mark Hollmer contributed to this report.