US Auto Sales Surge to 10-Year Highs Amid Millennial Buying Spree

Strategic Insights -

US consumers, inspired by pre-recession confidence and relatively affordable financing, are snapping up pricey sport utility vehicles and pickups, driving the biggest auto sellers to beat estimates and flirt with sales levels not seen in 10 years. Millennials are also increasingly entering the market, said Larry Dominique, executive vice president for car-pricing website TrueCar Inc., making the sales results no fluke. Consumer confidence has inspired consumers to start trading in their old rides, as the six biggest sellers of autos in the US all increased volumes and beat estimates last month.

Key Takeaways:

  • General Motors sales rose 6.4 percent, beating projections for a 0.6 percent improvement, and Ford's light-vehicle deliveries rose 5 percent, topping estimates for a 1.8 percent gain.
  • Fiat Chrysler Automobiles NV has grown now for 64 straight months, delivering 178,027 vehicles in the US last month, with a 6.2 percent gain exceeding the 4.8 percent average estimate.
  • Nissan's US auto sales rose 7.8 percent, beating the average estimate for a 5.3 percent gain, with strong demand for crossovers such as the Rogue and Murano driving sales up 22 percent.
  • Honda's 7.7 percent increase topped projections for a 4.7 percent gain, and Toyota reported a 0.6 percent gain compared with estimates for a 0.1 percent decline from a year earlier.
  • Auto sales momentum is expected to carry forward for 18 months, with Mark Wakefield, a Southfield, Michigan-based consultant with AlixPartners, predicting carmakers will sell 17.1 million cars and light trucks this year and 17.4 million next year.
  • Millennials are coming into the market "pretty fervently," said Larry Dominique, reportedly inspired by the economic recovery, vehicle affordability, and more employment.

Statistics:

  • Deliveries totaled 1.51 million cars and light trucks last month, according to Autodata Corp., topping the 1.48 million average analyst prediction.
  • The selling pace accelerated to 17.6 million from 16.5 million a year earlier, exceeding the average estimate of 17.2 million and the fastest pace in the Bloomberg survey of 17.3 million predicted by Patrick Archambault of Goldman Sachs and Chris Hopson of IHS Automotive.
  • The combined sales of Volkswagen and Audi brands rose 8.4 percent to 48,954, beating estimates for a 3.6 percent increase.
  • Fiat Chrysler deliveries of the Chrysler 200 almost doubled to 15,108, helping the three-vehicle Chrysler brand to a 9.7 percent gain for the month.
  • Jeep brand sales jumped 23 percent for its best July ever, as all models posted increases, led by the Wrangler and Cherokee.

Sources:

  • Bloomberg News
  • University of Michigan Surveys of Consumers
  • TrueCar Inc.
  • Autodata Corp.
  • AlixPartners
  • Goldman Sachs
  • IHS Automotive
  • AutoTrader.com
  • Mark Wakefield, Southfield, Michigan-based consultant with AlixPartners
  • Larry Dominique, executive vice president for car-pricing website TrueCar Inc.