After slower U.S. light-vehicle sales in January and February, there was a jump in March, and some industry observers thought it would carry into April. It didn't.To get more auto news, you can visit shine news official website.
An auto sales phenomenon known as the "spring bounce," when some Americans decide to use tax refund checks as down payments on new vehicles, or just generally get an itch for a new car or truck with the improved weather, appeared to have fallen flat in April.
New-vehicle sales dropped 2.3 percent last month to 1.33 million. Analysts such as Cox Automotive, Edmunds, J.D. Power/LMC Automotive and TrueCar's ALG had expected a modest rise from a year earlier. Even with an extra selling day — 25 days last month vs. 24 in April 2018 — sales slipped.April's seasonally adjusted, annualized selling rate slowed to 16.4 million, down from 17.4 million in March and 17.3 million in April 2018. The average of 10 analyst estimates in a survey by Bloomberg was for a pace of 16.8 million last month.
Cox senior economist Charlie Chesbrough said that the spring numbers could be deceiving. "I don't think March was as good as the numbers say and I don't think April was as bad as the numbers say," Chesbrough said. He added, "But clearly the trend is we're down from the pace we had in the fourth quarter of last year" when the SAAR averaged 17.6 million, according to the Automotive News Data Center.
For all of 2018, sales totaled 17.3 million, a number that surprised many analysts and executives. After toppping 17 million for three straight years, 2018 was widely expected to cool off.
Considering such high selling rates, Chesbrough said that the downward trend is by no means alarming. "At least not yet," he said. Cox projects a total of 16.8 million sales for 2019.Jeremy Acevedo, Edmunds' manager of industry analysis, said April appears to be a good indicator for where the year is headed. "The lesson we can take from April is you can take [March] and throw it out the window," he said.
March got a boost from fleet sales, which could continue to affect monthly sales sporadically throughout the rest of 2019, analysts said. While retail sales were generally expected to be soft, fleet sales in April were not strong enough to make up for the decline, as some analysts had anticipated.
April's "softer than expected fleet sales [are] less concerning than a pullback in consumer demand" would be, David Leiker, an analyst with Baird Equity Research, wrote in a note to clients.
Chesbrough, noting fleet sales are "always kind of a wild card," pointed to an aspect of the Trump administration's 2017 tax reform legislation that could add some fuel to that fire: Companies can accelerate depreciation allowances for business fleets. "I think it kind of snuck through because people weren't paying attention to it," he said. But accountants and tax experts have since grown privy to this portion of the relatively new tax law.