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Analysts: Auto Sales up, but Could Falter as the Year Goes on

July 9, 2018 1 Comment

In the face of higher gasoline prices and rising interest rates, U.S. auto sales were on the up for the first six months of 2018.

According to, sales rose 1.8 percent over the first half of the year, and June auto sales were up 5 percent compared to 2017. The boost was fueled by strong consumer confidence and low unemployment rates, analysts said.

Analysts at Cox Automotive, including Kelley Blue Book, urged some caution with regards to the numbers, saying that much of the increase was due to low-profit sales to fleet buyers. They added that retail sales to individual buyers were “propped up” by rising incentives (e.g. rebates, subsidized leases).

Auto sales are “defying gravity,” said Jonathan Smoke, chief economist for Cox Automotive. “Retail sales have been flat, and even those sales have been supported by incentives being up 6 percent.”

New-vehicle prices and payments could increase over the last half of the year as a result of rising interest rates and a possible trade war due to tariff threats by U.S. President Donald Trump, Cox analysts said. Still, Cox raised its full-year forecast by 100,000 to 16.8 million vehicles, since automakers are willing to spend to keep their market share.

Truck and SUV sales made up 68 percent of the market last month, according to Edmunds, marking a record high even as car sales fall.

The Federal Reserve raised its benchmark interest rate for the second time in mid-June, meaning it “may step up the pace of rate increases.” The bank raised its key short-term rate from 1.75 to 2 percent; consumers and businesses will likely face higher loan rates over time as a result.

While auto interest rates held steady in June, Cox analysts said, they are expected to rise. According to’s website, new-auto loans are around 4.75 percent. Gas prices are up 63 cents per gallon compared to 2017, reaching an average of $2.86 according to the AAA.

Here’s how the major automakers fared over the first half of the year, according to Edmunds:

  • General Motors: +4.2 percent
  • Ford: -1.8 percent
  • Toyota: +3.0 percent
  • Fiat Chrysler: +4.5 percent
  • Honda: -0.5 percent
  • Nissan: -4.8 percent
  • Hyundai: -3.3 percent
  • Volkswagen: +7.2 percent

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  • Kelly Kleinman says:

    But in reality, new car sales are falling based on calendar month sales. Total car sales might be up slightly, but new cars sales comparing May and June of 17 vs May and June of 18 are not (sans F-150s). The trend is downward.