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New-vehicle sales maintain pace, for now

September 7, 2018
Most major automakers reported increases in U.S. sales in August, though analysts expect vehicle demand to cool for the remainder of 2018 amid higher interest rates and rising vehicle prices.
Overall U.S. auto sales were expected to rise slightly in August as customers took advantage of Labor Day discounts against a backdrop of a healthy U.S. economy, analysts said. Consumers continued to flock to sport-utility vehicles and pickup trucks, helping push the average selling price to $31,836 in August, market research firm J.D. Power said.
The year-over-year comparison benefited from weak sales in August 2017, when Hurricane Harvey forced the closure of hundreds of dealerships in southeast Texas, denting the national total.
Sales are expected to cool in coming months with such factors as rising interest rates, higher vehicle prices and the threat of tariffs on automotive imports prompting customers to consider buying a used car or delay a vehicle purchase altogether, analysts said.
"All the positive economic news can’t overtake the worsening buying conditions for consumers," Charlie Chesbrough, senior economist for Cox Automotive, said in a statement. He believes the U.S. auto market, which peaked in 2016 with a record 17.6 million vehicles sold, is tracking about two years ahead of the broader economy.
Still, the auto industry remains historically strong, on pace to reach U.S. sales of about 17 million vehicles this year. The shift toward higher-price SUVs and pickup trucks continues, which should help bolster automakers’ bottom lines.
SUVs, pickups and vans accounted for about 68 percent of the new-vehicle retail sales in August, the highest-ever level for the month, J.D. Power reported.