This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

August Auto Sales Remain Strong

Stocks in this article: F GM HMC TM

DETROIT ( TheStreet) -- July durable goods orders came in weaker than expected, but auto sales, another key economic indicator, remain strong this month.

The August new-vehicle selling rate is expected to be the highest monthly rate in more than four and a half years, according to a monthly sales forecast issued Friday by J.D. Power and affiliate LMC Automotive.

The forecast anticipates a 16% gain to 1.3 million light vehicle sales and a seasonally adjusted annual sales rate of 14.1 million. LMC Automotive anticipates total 2012 light vehicle sales of 14.3 million, the highest level since 16.1 million in 2007. However, the firm recently reduced its annual estimate from 14.5 million units.

"August continues this summer's trend of healthy growth in retail sales as dealers work to sell down inventory in time to make room for 2013 models," said John Humphrey, J.D. Power senior vice president of global automotive operations, in a prepared statement. Incentives are down slightly from July, but deals are available due to model-year sell downs.

"To date, automakers have been diligent in better balancing production with demand, which has been critical to the improved financial performance for many brands," Humphrey said. "Going forward, this discipline will be tested as demand looks to cool somewhat through the balance of the year."

The Census Bureau said Friday that durable goods orders rose 4.2% in July, the third consecutive monthly increase. But excluding transportation, new orders decreased 0.4%. Economists on average expected durable goods to increase 2.4% in July with the core figure seen rising 0.5%.

A positive sign in the auto sector, J.D. Power said, is that retail sales, the best measurement of consumer sentiment, remain strong. As a result, fleet sales represent just 17% of light vehicle sales, less than the 21% year-to-date average.

A key factor driving August auto sales is trade-ins, said analyst Ivan Drury. "People are trading in cars because they are getting old," Drury said, in an interview. "Consumers are going to need-based purchasing."

In 2005, about 40% of new car buyers traded in an old car, with the trade-ins average five years in age, he said. This year, about 50% of new car buyers trade in an old car, with the average age six years. "That's another 15,000 miles, with more spending on repairs," he said. "The age of their cars is weighing on consumers' consciousness."

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs