US auto sales soared to 17.5 million units on a seasonally-adjusted annualised basis in July, marking the third consecutive month of sales above the 17 million unit mark. Of the top 8 selling brands, seven recorded gains in the 5-8% y/y range, with Nissan, Hyundai and Kia leading the way. Toyota lagged behind with an increase of only 1% y/y. Helped by lower gasoline prices, light trucks continued to be the key drivers of overall sales, up 13% y/y in July, while passenger car sales were down 1.8% y/y.
American consumers were car shopping in full force in July, as rising employment, low interest rates and longer loan terms have made vehicles more affordable. These conditions are likely to remain in place going forward. Even with the Federal Reserve expected to begin a rate-hiking cycle in September, the process of normalizing rates will be slow and gradual, with borrowing costs remaining low for quite some time still. July's auto numbers set the stage for another solid performance in the third quarter, giving spending on durables a boost. Overall, auto sales for the year as a whole are on track for the highest sales pace in 10 years.
