U.S. auto sales revved up in July, resulting in a 5.3 percent increase from 2014.
During the industry’s hottest selling season, 1.5 million vehicles were sold in July. With Labor Day around the corner, we except to see continued success in the automotive retail. In addition to summer’s typical auto sales increase, this year’s exceptional performance sped up due to other factors, including:
1. The rising consumer demand for trucks and SUVs benefits automakers and dealerships.
With Jeep sales up 23 percent, Fiat Chrysler, for example, exceeded expectations and enjoyed its best July since 2005. With the largest July decline in gas prices in six years, consumers are now embracing these vehicles. Gas prices fell 30 out of 31 days during the month, bringing the national July average price of gas to $2.70 per gallon. Today, trucks and SUVs are far more fuel efficient than they used to be, adding to the increased appeal. Just a few years ago, high gas prices seemed to push shoppers away from trucks, SUVs, and crossovers.
Nationwide across all automakers, July truck and SUV sales rose nearly 13 percent to 840,000 sold. In contrast, car sales declined by 3 percent, to 670,000 sold. Propelled by these vehicles higher average profit margins than cars, automakers experienced strong earnings correlating from the exceptional truck and SUV sales.
2. Shoppers are defying recession-era predictions and favoring luxury vehicles.
So far this year, luxury brands made up 11.5 percent of vehicles purchased, up from 10.2 percent three years ago. Luxury automakers are adding more models at lower prices, attracting millennials. This demographic is now leasing luxury cars at a higher rate than other generations. Lexus, Jaguar, Cadillac, and Acura are among the top 10 brands leased by millennial buyers.
3. As online leads increasingly convert to deals, July’s high digital activity also bolstered July’s auto sales.
Compared to June 2015, dealership websites received 8.3 percent more mobile site visits and 3.2 percent more desktop visits. They also experienced a 10.9 percent increase in social media activity from last month, and an astounding 164 percent more visits to their social sites compared to July of last year. Thirty percent of shoppers who submit an online lead through digital retailing tools ultimately buy the vehicle. Now, 89 percent of car buyers who walk into dealerships are fully prepared to buy a specific vehicle.
Will August be able to maintain July’s auto sales success? Stay tuned to see how the auto industry closes out the summer and the automotive trends that continue throughout August.