U.S. new auto sales should decline for the fourth straight month in August. According to the Bloomberg consensus, they are expected to drop to 14.50m(e) SAAR, down from 14.75m in July. It would be the lowest level since June 2020.

Specialists Expect A Downward Surprise

Specialists I’m following closely are expecting a downward surprise:

1- “The pace of auto sales, or seasonally adjusted annual rate (SAAR), is expected to finish near 14.3 million, the slowest sales pace this year, according to a Cox Automotive forecast”

2- J.D. Power and LMC Automotive said “The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 13.1 million units, down 2.1 million units from 2020 and down 4.0 million units from 2019.”

3- Wards Intelligence expects sales to reach 14.1 million SAAR in August.

4- Lastly, Truecar “forecasts total new vehicle sales will reach 1,212,399 units in August 2021, down 4% from a year ago but up 1% vs. July 2021, when adjusted for the same number of selling days. This month’s seasonally adjusted annualized rate (SAAR) for total light vehicle sales is an estimated 14.4 million, down 4% from August 2020.“

Auto Sales Are Dampened By Limited Supply And Record High Prices

The global chip shortage has deteriorated significantly and has impacted U.S. vehicle production, causing supply to collapse. Bloomberg underlined “Chip lead times, the gap between ordering a semiconductor and taking delivery, increased by more than eight days to 20.2 weeks in July from the previous month, according to research by Susquehanna Financial Group. That gap was already the longest wait time since the firm began tracking the data in 2017.” The main problem is that modern cars are heavily relying on electronics that include semiconductors.

In the meantime, other supply chain disruptions have multiplied worldwide with ports shutdown in China. In this context, BEA data showed July domestic auto inventories in the U.S. crashed to the lowest since records began in 1967. 

The lack of inventory is driving the price of the new vehicles to record highs as both manufacturers and retailers continue to dial back discounts. According to J.D. Power and LMC Automotive, “For August 2021, average transaction prices are expected reach an all-time high of $41,378, and the first time above the $41,000 level. For context, average transaction prices are trending to be over 16% higher in August 2021 than they were in August 2020.” Therefore, it’s not surprising that consumers’ complaints about rising prices were at the highest ever.