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August 2013

Analysts Expect August Vehicle Sales to Reach Almost the Same Level as in July

Automakers will release August vehicle sales next Wednesday (September 4th) and currently, analysts estimate August sales to reach almost the same level as in July (15.73 million seasonally adjusted and annualized).

 

Here are some forecasts from specialists:

 

1/ Edmunds: Retail Market Keeps Auto Industry at Full Speed in August, Forecasts Edmunds.com

 

Edmunds.com, the premier resource for car shopping and automotive information, forecasts that 1,455,911 new cars and trucks will be sold in the U.S. in August for an estimated Seasonally Adjusted Annual Rate (SAAR) of 15.6 million. The projected sales will be a 10.9 percent increase from July 2013, and a 13.3 percent increase from August 2012.
 
“Car buyers are continuing their steady march into car dealerships and they’ll keep marching right through Labor Day weekend with attractive deals and promotions luring them in,” says Edmunds.com Senior Analyst Michelle Krebs. “While retail sales are strong in August, automakers are further reducing their dependence on fleet sales. This month’s fleet percentage of total sales looks to be the lowest since at least 2007, and the result will be stronger resale values for customers buying new cars and healthier bottom lines for automakers.”

 

2/ TrueCar: August 2013 New Car Sales Expected to Be Up 14.4 Percent According to TrueCar; August 2013 SAAR at 15.75M, Highest August SAAR since 2007

 

For August 2013, new light vehicle sales in the U.S. (including fleet) is expected to be 1,464,214 units, up 14.4 percent from August 2012 and up 11.8% percent from July 2013 (on an unadjusted basis).
 
The August 2013 forecast translates into a Seasonally Adjusted Annualized Rate (“SAAR”) of 15.75 million new car sales, down less than one percent from July 2013 and up nine percent over August 2012.
 
“New vehicle sales defied their typical strong correlation with Wall Street in August and continued to post a healthy increase despite the lackluster performance in financial markets,” said Jesse Toprak, senior analyst for TrueCar.com. “Small SUVs became the fastest growing segment this month, with this very functional and affordable vehicle category now making up 15.5% of all sales, up from 13.5% from a year ago.”

 

3/ JD Power: J.D. Power and LMC Automotive Report: August New-Vehicle Sales Reach Highest Level in Seven Years
 

With consistency in the fleet environment, total light-vehicle sales in August 2013 are also expected to increase by 12 percent from August 2012 to 1,495,400. Fleet sales are expected to account for 15 percent of total sales, with volume of 225,000 units.
 
PIN and LMC data show total sales reaching a 16 million unit SAAR in August, which is the highest since November 2007, with actual unit sales the highest since May 2007.
 
New-vehicle sales continue the hot streak that has been trending throughout the summer selling season, with no evidence of the pace slowing, according to a monthly sales forecast developed jointly by the Power Information Network(R) (PIN) from J.D. Power and LMC Automotive.
 
“The industry as a whole continues to experience a robust improvement in demand, and our forecast for August is looking to be the best month for retail sales that we’ve seen in the past seven years,” said John Humphrey, senior vice president of the global automotive practice at J.D. Power. “Moreover, this strong selling environment is occurring when consumers are spending more on new vehicles than any month on record, which is a further indication of the underlying strength of the sector.”

 

4/ Wards: Daily Sales Stay Steady in August Sales Forecast
 

The U.S. light-vehicle daily sales rate in August should remain nearly flat with July’s DSR, but with three extra selling days monthly sales should rise to nearly 1.47 million units, a new WardsAuto forecast predicts
 
The resulting 15.7 million seasonally adjusted annual rate would match the July SAAR but fall short of June’s 67-month high of 15.8 million units.
 
Market conditions are relatively unchanged from July, with robust consumer demand capped by tight inventories and overall sales dampened somewhat by below-trend fleet orders.
 

 

5/ Kelley Blue Book: Crossovers, Pickup Trucks Lift August Sales Nearly 14 Percent, According To Kelley Blue Book
 

New-vehicle sales are expected improve 13.6 percent in August 2013 to a total of 1.46 million units, according to Kelley Blue Book www.kbb.com, the leading provider of new and used car information.
 
The seasonally adjusted annual rate (SAAR) for August 2013 is estimated to be 15.6 million, up from 14.5 million in August 2012 and down from 15.8 million in July 2013.
 
“Most automakers are seeing double-digit sales increases compared to last year as retail sales remain a bright spot, even with more new models entering the market,” said Alec Gutierrez, senior analyst at Kelley Blue Book. “Subaru continues to shine, estimated to be up 30 percent this month even with capacity constraints, and Honda once again has one of the strongest year-over-year growths. On the other hand, Ford could have been up double digits, but has been hampered with production issues from both the Escape and Fusion.”

NABE Economists Do Not Expect “Tapering” in September

Contrary to the Bloomberg consensus, the NABE (National Association of Business Economists) survey shows that most economists do not expect the Fed to “taper” in September.

 

More from Bloomberg:

 

The Fed will reduce its monthly bond purchases from $85 billion at its next meeting on Sept. 17-18, according to 65 percent of economists in an Aug. 9-13 Bloomberg survey. The median estimate is for a cut to $75 billion each month.

 

More from WSJ:

 

Most economists say the Federal Reserve won’t begin scaling back its bond-buying program until later in the fall or early next year, according to a National Association for Business Economics survey released Monday.
 
The economists appear to be more cautious in their outlook than Wall Street banks and even some Fed officials that have looked to the central bank’s September 17-18 meeting as a point to begin easing the pace of bond purchases, currently at $85 billion a month.
 
Only 10% of 220 economists polled expect the wind down to start before the end of September. The survey found 39% expect the first tapering of purchases in the final three months of 2013 with the remainder saying the Fed will hold off at least until 2014.

 

This survey was unveiled while several Fed members gave their opinions last Friday about reducing the asset purchases program. All believe that currently, there is not enough data to make a tapering decision in September. San Francisco Fed President John Williams (non-voter) and St. Louis Fed President James Bullard (voter) seem to favor “tapering” later this year. However, Atlanta Fed President Dennis Lockhart (non-voter) could support September if data continue to point toward a sustainable improvement (growth and employment).

 

My view
 
I still believe that Fed will not begin to reduce its asset purchase program in September because:
 
- Since few days, excluding Dallas Fed President Richard Fisher, Fed non-voters, who are more hawkish than voters, have become more cautious concerning the need for “tapering” in September and could be disappointed by economic data.
 
- Indeed, despite some improvement in Europe and China, the latest US figures for July and August were disappointing and confirmed that growth forecasts published by Fed in June are not reachable. Moreover, investors begin to have concerns regarding the impact of higher mortgage rates to the extent that new home sales fell significantly in July.
 
Moreover, as Lockhart noted it, a difficult political situation in Washington in the fall could be a blow to confidence.

Boehner Will Propose Short-Term Bill to Avert Government Shutdown but Will Maintain “Sequester”

As everybody knows, Republicans and Democrats had been expected to clash in September over funding for federal operations, ahead of the Oct. 1 (start of the new fiscal year). In a context where public finances are improving significantly, Democrats seem ready to avoid budget cuts or even increase spending in some areas while Republicans still want to limit expenses.

 

On a conference call Thursday evening with GOP lawmakers, House Speaker John A. Boehner said it was his “intent to move quickly” when lawmakers return to Washington in September to propose a short-term spending bill that keeps the government running for 60 to 75 days and therefore avert a “government shutdown”. In this context, lawmakers could defer the toughest budget issues to later in the fall, when lawmakers should face a deadline to raise the debt ceiling, according to CBO estimates. Yet, this budget bill will maintain sharp automatic spending cuts ($109 billion) which should entry into force from October 1st.

 

More from Washington Post:

 

House Speaker John A. Boehner said Thursday that he plans to avert a government shutdown at the end of September by passing a “short-term” budget bill that maintains sharp automatic spending cuts, known as the sequester.
 
“Our message will remain clear,” Boehner said. “Until the president agrees to better cuts and reforms that help grow the economy and put us on path to a balanced budget, his sequester — the sequester he himself proposed, insisted on and signed into law — stays in place.”

Greece Will Make a Primary Surplus in 2013 as “Summer Season” Keeps its Promises

After beating significantly budget targets in Jan-July period with a a primary budget surplus of about 2.5 billion euros against an interim target for a deficit of 3.1 billion for the period, a report coming from Kathimerini suggests that August revenues give reason for gov’t hope to achieve a primary surplus in 2013.

 

More from Kathimerini:

 

Budget revenues were up by about 120 million euros, or 11 percent, in the first 20 days of August, compared to the same period last year, giving the government cause for optimism.
 
As the monthly target is 3.9 billion euros, when 4.8 billion was collected in August 2012, ministers believe that at the same rate of collection the monthly target will be overshot by 300-400 million.
 
The encouraging signs this month are that income tax inflows are 50 percent higher than last year, taxes on deposit interest are up 41 percent, VAT is also up – mostly due to heightened activity in tourism – and car sales are markedly higher.

 

As a consequence, Greece should make a primary surplus in 2013 and will get at least a third aid program in 2014. We can also expect a debate on a potential haircut after the German election (September 22nd).