U.S. vehicle sales fall for seventh consecutive month in July

U.S. vehicle sales dropped in July for the seventh straight month. U.S. auto sales dropped to 16.7 million units, below last July’s 17.8 million units. This is the fifth straight month of sales that have dropped below the 17 million unit mark. The drop in sales activity was widespread across major retailers, with Toyota being the only firm to record a growth relative to year-ago levels.

Both passenger cars and light trucks saw sales fall, with car purchases falling 13.8 percent on the year and light trucks down 1.1 percent compared to year-ago levels. This continues the pronounced downward trajectory in sales of passenger vehicles that have dropped for 21 straight months.

Despite auto sales shrinking consistently in 2017, the level of sales continues to be healthy relative to historical standards. However, with the peak in sales further in the rear view mirror, auto firms are not expected to ramp up production anytime soon. Increased competition from used car dealers and tightening credit conditions would continue to restrict demand.

Automakers have already begun to slow production to account for this, with the ISM manufacturing report noting weakness in auto production. The subdued performance in the first half of 2017 has continued into the third quarter, presenting a possible barrier to growth in consumer spending this quarter, an area that has played a vital role in the economic recovery, noted TD Economics in a research report.

A firming labor market is expected to give some support for demand, but a return to the strong sales levels seen last year is not on the table. Overall, this report adds to a series of subdued auto sales reports in 2017.

“We expect sales to hover around a healthy 17 million unit mark through 2018, reflecting the limited upside potential for growth”, said TD Economics.