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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, 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 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 “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, 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.”

Existing Home Sales will be Higher than Expected in July

The NAR is scheduled to report July existing home sales tomorrow and the Bloomberg consensus is expecting 5.15 million units up 1.4% from June.


Yet, according to my friend, Christophe Barraud, Chief Economist and Strategist at Market Securities and also the best forecaster of US statistics since November 2012, existing home sales should rise sharply in July:


According to my estimate, in order for the sales in adjusted value to be stable from June to July, that is to say around 5 080 K – raw data should rise 16.2% from July 2012 to July 2013. Nevertheless, local data that I gathered show a rise of 20.8%. Indeed, even if existing home rose slightly in some regions like Las Vegas (1.2%), they increased significantly in some areas such as North Texas (28.0%). Finally, we get a seasonally adjusted statistics of 5 280 K which represents a 3.9% rise MoM.
This rebound in existing home sales was due to several factors:
1/ Inventories’ rebound: With the significant increase in prices, more and more households are no longer in a situation of “negative equity” and now want to sell their property.
2/ The recent rise in mortgage rates led buyers enjoying a rate-lock period of the borrowing rate to exercise their options.


This forecast is coherent with articles which show that sales rose YoY in some regions and therefore were far above the +16.2% threshold needed to stabilize sales in July:
- Clark County (+39.3% YoY)
- California (+21.8% YoY – the highest figure for a July since 2005)
- South Carolina (+23.6% YoY)
- Triangle (+34.3% YoY)

Eurozone Emerges from Recession Thanks to France and Germany

The German and French economies grew respectively by 0.7% and 0.5% in Q2 (faster than the US), pulling the Eurozone out of its longest recession.


Eurozone growth was 0.3% from the previous quarter, with its two biggest economies revealing unexpected strength such as Austria (0.2%) and Finland (0.7%). In the meantime, Portugal was the best performer with 1.1% growth due to higher exports. That compared with around 0.4% growth in the quarter (1.7% annualized)  in the United States.


Regarding France, economy posted its strongest quarterly growth since early 2011 supported by consumer spending, industrial output and inventories, although investment component fell gain. At the opposite, German economy posted  its largest expansion in more than a year thanks largely to domestic private and public consumption ahead of elections (September 22).


On the negative side, the recession is worsening in Netherlands (-0.2% QoQ ; -1.8% YoY) and particularly in Cyprus (-1.4% QoQ ; -5.2% YoY) where the contraction could exceed forecast set by European Commission (-6.7% for 2013) and therefore could challenge the bailout program.


Overall, despite some disappointments, Eurozone is on track to technically recover (two positive quarters) in Q3 2013  as several surveys  (Eurozone PMI, Sentix Investor Confidence) show that conditions have improved since the end of June.


Source: Eurostat

Eurozone Q2 GDP Forecasts: An Update

Since our last update, several indicators which can be used to forecast Eurozone Q2 GDP were published:


1/ Belgian economy, which represents 5% of Eurozone real GDP, grew by 0.1% QoQ in Q2.

2/ Despite French consumer goods spending increased in Q2, it  fell more than expected in June.

3/ German real retail sales also dropped well below expectations in June.
4/ Italian GDP was down 0.2% QoQ in Q2.


As a consequence, we can update our scenarios with a more cautious approach regarding French and German contributions. By taking into account the weight of each economy in the euro area (Germany: 27%; France: 21%; Italy: 18%; Spain: 12% and Belgium: 5%), we can adjust our forecasts:


Growth Forecasts
Scenario Pessimistic Central Optimistic
Germany 0.2% 0.3% 0.4%
France 0.0% 0.1% 0.2%
Italy (1st publication) -0.2% -0.2% -0.2%
Spain (1st publication) -0.1% -0.1% -0.1%
Belgium (1st publication) 0.1% 0.1% 0.1%
Others -0.2% -0.1% 0.0%


Growth Contributions
Scenario Pessimistic Central Optimistic
Germany 0.054% 0.081% 0.108%
France 0.000% 0.021% 0.042%
Italy (1st publication) -0.036% -0.036% -0.036%
Spain (1st publication) -0.012% -0.012% -0.012%
Belgium (1st publication) 0.005% 0.005% 0.005%
Others -0.034% -0.017% 0.000%
Total -0.023% 0.042% 0.0107%
Total (rounded) 0.0% 0.0% 0.1%

Last data change the final results (rounded) of our central and optimistic scenarios. The central estimate becomes 0.0%. Therefore, France and Germany should post strong numbers in Q2 to expect a technical recovery (two positive quarters) in Q3 which seems to be confirmed by the last July and August surveys (Eurozone PMI, Sentix Investor Confidence),