Although official numbers aren’t in yet, new car sales for July are expected to be lower this year than they were last year.

The July LMC Automotive and J.D. Power Forecast  predicts sales are projected to reach 1,156,200 units. That is a 3.2% decrease compared with July 2017. July will also mark the 5th time sales have dropped this year.

Jeff Schuster, President, Americas Operations and Global Vehicle Forecasts at LMC Automotive, said that's not totally shocking, “With the first half of 2018 being slightly ahead of volume expectations, the second half is poised for a pullback from the robust second half of 2017. July’s expected performance is consistent with that notion.”

Even with lower July sales, there is a silver lining according to J.D. Power.

“While it’s disappointing for the retail sales pace to post declines again, it’s important to remember that July only has 24 selling days this year, the fewest for the month since 2012 and one less weekend than last year,” said Thomas King, Senior Vice President of the Data and Analytics Division at J.D. Power.  “More notable is that incentive spending is on pace to post year-over-year declines for the first time in 54 months.”

After 54 consecutive months of year-over-year increases, incentive spending is forecasted to fall by 5% this month. Incentive spending through the first two weeks of July was $3,665 per unit, down $204 from the same time last year.

Potential tariffs and taxes coming down the line could also be causing a fall in sales Schuster said, “Short-sighted tariffs—and retaliatory responses—are the most significant risk factor for the U.S. and global markets. In fact, significant escalation of tariffs could derail America’s strong economic growth and even push the market into a premature recession.”

But not everyone feels that way. Cox automotive has a different theory.

“The U.S vehicle market remains strong and all the talk of higher interest rates and trade tariffs are not chasing away buyers,” said Charles Chesbrough, senior economist at Cox Automotive. “In fact, the threat of higher prices on the horizon may be driving more shoppers to the showrooms now.”

Overall, July started strong with Fourth of July sales and soon after, sales dropped. Manager of industry analysis at Edmunds, Jeremy Acevedo,  says this will be the trend for the rest of the year, "Sales likely slowed down due to a dry-up of deals as automakers wrapped up Fourth of July sales," said Acevedo. "As consumer wallets get increasingly squeezed by rising prices through the second half of the year, holiday sales events may play an increasingly significant role in getting shoppers to the dealership."