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US Auto Sales in August: A Ray of Hope Auto Investors?

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Auto stocks in August 2017

In August 2017, all mainstream US auto companies’ stocks traded on a mixed note. General Motors (GM) rose ~1.6%, while Ford (F) fell 1.7%. Fiat Chrysler (FCAU) delivered exceptional returns of 25.1% in August. Fiat Chrysler’s performance was better than the 0.1% rise in the S&P 500 benchmark (SPY). Fiat Chrysler’s solid 2Q17 results along with reports about its acquisition bid could be the primary reasons for optimism about its stock.

In contrast, Tesla (TSLA) outperformed most of the auto stocks and rose 10.0% last month.

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August US auto sales estimates

According to Autodata, the SAAR (seasonally adjusted annual rate) for US auto sales was at 16.73 million vehicle units in July 2017. It was a sharp fall from the SAAR of 17.81 million reported in July 2016.

In the first seven months of 2017, US auto sales have fallen 2.9%. In July, the demand for US heavyweight vehicles fell 2.5% for the first time in 2017.

According to JD Power Ratings’ estimates, the August 2017 SAAR for US auto sales could be at 16.6 million units—compared to 17.2 million units in August 2016.

In 2016, the US auto sales volume was at the highest level with ~17.55 million vehicles units. In contrast, weakness in the first seven months of 2017 also ignited the debate about the downturn in US auto sales. Continued weakness in US auto demand in August could hurt auto investors’ sentiments going forward.

In this series

In this series, we’ll look at some key macroeconomic indicators that auto investors should track to get an idea about the future trend in auto sales. We’ll look at recent consumer sentiments, industrial production, and jobs-related data. We’ll discuss some factors that could impact automakers’ profitability going forward.

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