U.S. Vehicle Sales (June 2020)

U.S. vehicle sales continue to rebound in June, albeit at a slower pace than May 

• U.S. vehicle sales rose by 5.7% month-on-month (m/m) to 13.1 million (SAAR) units in June. The reading was slightly ahead of the consensus forecast for 12.9 million.  
• Raw sales volumes came in at 1.1 million, or 26.9% below year-ago levels. June's daily selling rate of 44,152 measured over 25 days was 24.0% below same-month levels last year, which was 58,064 over 26 selling days. 
• Passenger vehicles led the gains in June rising by 8.8% m/m, while sales of light trucks were higher by 4.8% m/m. Light trucks (including SUVs) accounted for 77% of sales in June. 

Key Implications

• Our first glimpse into June consumer spending data showed that households continued to increase expenditures, albeit at a slower pace than in May. Vehicle sales remain 22% below pre-virus (February) levels. 
• Tight inventory, which currently sits at a nine-year low, may have been a factor restraining sales in June. This is particularly true across some sub-segments of light-trucks where sales in April and May were exceptionally strong, and hence created notable holes in inventory for specific types of vehicles (most notably, pick-up trucks). Some pullback in incentive offers (relative to April highs) may have also slowed the recovery, although on a year-ago basis incentives are still up by over 9%. 
• With the recent turn higher in COVID-19 infections across much of the U.S., many states have been forced to put a pause on reopening plans. This will undoubtedly manifest in a slower recovery for consumer spending, as it will only further accentuate the income shock for those working in industries most deeply impacted (e.g. food & accommodation, recreation services, etc.).  Moreover, the increased economic uncertainty alongside elevated health risks will likely reduce/limit the number of individuals visiting showroom room floors. In light of the recent events, we have lowered our sales forecast for the second half of 2020, with sales now expected to average somewhere in the 13.5-14 million range.

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