U.S. light-vehicle sales rose 1 percent in July at Hyundai, behind a 13 percent increase in crossover deliveries, signaling the broader market continues to slowly recover from the coronavirus pandemic.
Hyundai, with one of the industry’s smallest declines in second-quarter and first-half U.S. sales, continues to benefit from strong retail demand for an expanded crossover lineup, from the subcompact Venue to the large Palisade, while spending less on discounts.
Retail deliveries of crossovers rose 16 percent to 36,071 in July, Hyundai said, while car sales dropped 16 percent.
The July results mark the brand’s first gain in U.S. sales since volume rose 16 percent in February and 4.8 percent in January. Hyundai’s average incentive per new vehicle dropped to $2,447 in July from $2,724 in July 2019 and $2,509 in June, ALG estimates.
“Our inventory levels are stable and customers are able to find the Hyundai vehicle that best suits their needs,” Randy Parker, vice president for national sales at Hyundai Motor America, said in a statement. “There is still uncertainty in the economic conditions moving forward, but we will remain laser focused on the customer.”
In addition to Hyundai Motor Group, a few automakers that still report monthly U.S. sales will release July results on Monday: Toyota Motor Corp., Honda Motor Co., Subaru, Mazda and Volvo.
U.S. auto sales fell an estimated 13 to 19 percent in July based on estimates from ALG, LMC Automotive and Cox Automotive.
Just eight of the top 100 U.S. markets for new car and light-truck sales are expected to post year-over-year gains in July, J.D. Power estimates, noting Detroit, Buffalo and Milwaukee are among regions expected to post increases.
“July represents a slight pause in the overall recovery,” said Thomas King, head of data and analytics at J.D. Power:
Consumer sentiment fell throughout July as COVID-19 cases continued to rise, mostly in the South and West, key regions for new-vehicle sales.
“The market has been making slow but steady gains since April’s low, but there are many headwinds hampering our recovery,” said Charlie Chesbrough, senior economist at Cox Automotive.
High unemployment and uncertainty about the outlook for the U.S. economy also weighed heavily on potential buyers, keeping many out of showrooms.
And tight inventories, reflecting weeks of downtime and halting restarts at North American assembly plants, also continue to be a drag on sales.
J.D. Power last week estimated 41 percent of all vehicles sold in July will spend fewer than 20 days on dealership lots, up from 35 percent a year ago.
Despite the upended market, dealers have adopted to the challenging environment and continue to see major growth in new-vehicle sales margins, reflecting demand for popular and more expensive SUVs and pickups.
Total grosses, inclusive of finance and insurance income, are on pace to reach $1,922 per unit last month, up $620 from last year and a July record, J.D. Power said.
“The strong per-unit grosses offer some mitigation to the lower sales pace,” said King.
SAAR
The seasonally adjusted, annualized rate of sales last month is expected to tally 13.3 million to 14.3 million, according to the range of forecasts from ALG, LMC Automotive and Cox Automotive, and down sharply from the July 2019 rate of 16.9 million.
Since April, when the SAAR slumped to 8.66 million, it has slowly recovered, hitting 12.17 million May and 13.15 million in June, according to Motor Intelligence.
Incentives
Average incentive spending per unit is expected to reach a July record of $4,236, up from the previous record — $4,069 in July 2019, J.D. Power said. ALG estimates new-vehicle incentives averaged $3,813 last month, up nearly 3 percent, with the Detroit 3 and Nissan continuing to offer the steepest discounts, though Honda, Subaru and Volkswagen Group hiked spiffs 9 percent or more.
Odds, ends
- There were 26 selling days last month compared to 25 in July 2019.
- Incentive spending on cars is expected to rise $269 to $3,886 in July, while spending on pickups, SUVs, crossovers and other light trucks rose $106 to $4,343, J.D. Power said.
- Truck, SUVs and crossover were on pace to account for 75.5 percent of new-vehicle retail sales, the highest level ever for the month of July, J.D. Power said.
- Fleet shipments are expected to total 78,300 in July, down 60 percent from July 2019, and fleet sales are expected to account for 6.5 percent of total light-vehicle deliveries, down from 14 percent a year ago, J.D. Power estimates.
Quotable
“Mainstream brands are steadily increasing new-vehicle sales month-over-month, especially brands with healthy inventory levels such as FCA. The Jeep brand stands out for strong performance, likely driven by strong incentive programs as well as the inventory levels needed to satisfy the unique demands of shoppers. On the other end of the spectrum, new vehicles sales for luxury brands, such as BMW and Mercedes, are recovering at a slower rate. Consumers are not going back into the luxury market as quickly as mainstream brands, showing some budgetary discipline in reaction to the macroeconomic environment.”
– Nick Woolard, TrueCar analyst