Auto sales rose for a second consecutive month but remain weak

Light vehicle sales were 13.3 million at an annual rate in July, up from 13.0 million in June. The July result was a 2.6% increase over the previous month and the third increase in the past four months. It was the 14th consecutive month below the 16 to 18 million range, averaging just 13.6 million over that period (see first graph). Weak auto sales are largely the result of shortages of components that have limited production, resulting in falling inventory and rising prices.

Breaking down sales by assembly origin, domestic vehicle sales increased to 10.7 million units versus 10.7 million in June, an increase of 3.2%, while imports remained unchanged at 2. 65. Domestic sales were generally between 13 million and 14 million in the period before the pandemic, with an average of 13.3 million in the six years to December 2019. The domestic share was 80.1% in July versus 79. , June 6th.

Within the domestic light vehicle category, domestic car sales were 2.01 million in July versus 2.04 million in June, down 1.5%. Domestic sales of light trucks were 8.68 million compared to 8.32 million the previous month, an increase of 4.4%. This places the share of domestic light trucks in total domestic auto sales at 81.2 percent, continuing a long-term upward trend (see second chart).

Household assemblies declined in June, coming in at 10.01 million at a seasonally adjusted annual rate. This is down 1.7% from 10.19 million in May and below the average pace of 10.8 million for the three years to December 2019 (see third graph).

Shortages of components, especially computer chips, continue to limit production for most manufacturers, creating a shortage for many models, resulting in reduced inventory and higher prices. Ward’s estimate of car unit inventory was 114,300 in June, up from 102,600 in May, but still close to an all-time low (see fourth chart). Inventory could stabilize as the past ten-month average was 109,930 and has not fallen below 100,000. The Bureau of Economic Analysis estimates that the inventory / sales ratio rose to 0.555 in June, from 0.526 in May and the highest level since August 2021 (see fourth chart).

Low inventory levels have pushed prices sharply higher over the past two years, with average consumer spending on a car hitting $ 34,802 in June, up 3.2% from May to a new record high ( see fifth graph). Average consumer spend on a light truck rose to $ 50,170 from $ 49,647 in May, up 1.1 percent for the month and a new record high (see fifth graph).

As a share of personal disposable income per capita, average consumer spending on a car was 62.3% compared to 60.8% in May and up sharply from 51.8% in December 2019. of consumers for a light truck as a share of personal disposable income per capita was 89.8% against 89.4% in May and 78.8% in December 2019 (see fifth graph).

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 after more than 25 years of researching the economic and financial markets on Wall Street. Bob previously headed the Global Equity Strategy for Brown Brothers Harriman, where he developed an equity investment strategy that combines top-down macro analysis with bottom-up fundamentals.

Prior to BBH, Bob was Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist at Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a business degree from Fordham University and a business degree from Lehigh University.

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