U.S. Vehicle Sales (June 2021)

U.S. Vehicle Sales Slow Again in June          

• U.S vehicle sales fell 9.9% month-on-month (m/m) in June, falling to 15.4 million (SAAR) units (from 17.0 million in May). The consensus forecast was expecting a pull-back to 16.5 million, representing a significant underperformance. 
• Unadjusted volumes totaled 1.30 million in June, 17.8% above year ago levels but 14.2% below June 2019.
• Passenger vehicles (-10.8% m/m) saw a larger pullback than light trucks (-9.6% m/m). The light trucks segment accounted for 76.8 % of sales in June, down 1.0 percentage point from its share a year ago.  

Key Implications

• After strong gains through the early spring, the pace of new vehicle sales has cooled considerably courtesy of ongoing supply shortages. June's report pulls down the 6-month moving average of sales to 17.0 million, still slightly ahead the pre-pandemic 16.9 million reading in February 2020. 
• Strong demand for new cars as the economy re-opens has run up against supply challenges, producing historic price increases. Used vehicle prices continue to surge (+4.6% m/m in May, +48% y/y), while the most recent Consumer Price Index data show the price of new vehicles has jumped 1.6% m/m in May (the second largest monthly gain in 40 years). Moreover, these trends look to persist as inventory remains scarce. 
• This month's sales report reflects the ongoing supply chain issues befuddling global manufacturers. Low inventories worsened in May (-24% m/m) indicating a healthy consumer appetite and an industry-wide problem getting product to market. Furthermore, despite production slowly starting to ramp up in June automakers will be playing catch-up for the rest of 2021 as robust demand will continue through the balance of the year.  

Disclaimer

This report is provided by TD Economics. It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes. The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. This report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.