US new auto sales should decline for the third straight month in July. According to the Bloomberg consensus, they are expected to drop to 15.30m(e) SAAR, down from 15.36m in June. It would be the lowest level since August 2020.

Specialists Expect A Downward Surprise

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

1- “Cox Automotive forecasts the July sales pace to fall to 15.2 million, down from June’s 15.4 million level. This would be the third consecutive monthly pace decline after hitting a post-COVID-19 peak in April. ”

2- J.D. Power and LMC Automotive said “The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 15.0 million units, up 0.4 million units from 2020 but down 1.9 million units from 2019.”

3- Wards Intelligence expects sales to reach 14.8 million SAAR in July.

4- Lastly, Truecar “forecasts total new vehicle sales will reach 1,292,064 units in July 2021, up just 1% from a year ago but down 8% vs. June 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 14.7 million, staying on par with July 2020.“

Auto Sales Remained Affected By Limited Supply And Record High Prices

The global chip shortage has deteriorated significantly and has impacted US vehicle production this year causing supply to collapse. In June, BEA data showed domestic auto inventories in the US were at their lowest since records began in 1967. More recently, Cox Automotive highlighted “To start July, new-vehicle inventory was at a record low 25 days’ supply.”

The lack of inventory is driving the price of the new vehicles to record highs in a context where both manufacturers and retailers continue to dial back discounts. According to J.D. Power and LMC Automotive, “For July 2021, average transaction prices are expected reach an all-time high of $41,044. For context, average transaction prices are trending to be nearly 17% higher in July 2021 than they were in July 2020.” Therefore, it’s not surprising that consumers’ complaints about rising prices were at the highest since June 1981.