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Forecasted Jump in New-Car Sales for July

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Analysts at Cox Automotive are predicting a significant increase in new-car sales for the month of July. Despite higher interest rates, sales have been surprisingly strong this year, and July is expected to continue that trend.

Cox forecasts that July’s seasonally adjusted sales rate (SAAR) will be around 15.9 million, compared to 15.7 million in June and 15.1 million in May. This growth is attributed to improving inventories and the majority of new-car purchases being financed.

Typically, buyers aim to keep their monthly payments within budget, even if it means extending the payment period. However, recent months have shown that higher interest rates are not negatively impacting sales as expected.

Furthermore, the analysts note that the high inventory has helped reduce the pressure on new-car prices. In June, the average price paid by U.S. buyers for a new car was only 1.6% higher than the previous year, the smallest year-over-year increase since the start of the global pandemic.

While some automakers will release their July sales numbers next week, others like General Motors and Tesla report on a quarterly basis and are expected to share updates in early October.

It should also be noted that both Tesla and GM have recently exceeded second-quarter earnings expectations, with Ford set to release its earnings report later this week.

Car sales and prices saw significant growth during the pandemic due to disruptions in the supply chain and increased demand from people relocating or avoiding public transportation. However, higher inventories have led to elevated prices, often resulting in new cars selling above their sticker price with limited discounts available.

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