Houston auto sales drop almost 17% in August
New vehicle sales in the Houston area plunged 16.7 percent last month, despite Labor Day weekend discounts and lower interest rates.
Local auto dealers sold 21,546 new cars, trucks and SUVs in August, the third-lowest sales month so far this year, according to the TexAuto Facts report from InfoNation, a Sugar Land-based provider of automobile data.
Truck sales fell 15 percent while sedan sales fell 22 percent year over year. August nearly tied the 17 percent sales decline in April, which saw the largest sales plunge so far this year.
“August was a very large drop,” InfoNation President Dan McDowell said. “It’s a reflection of an issue with consumer confidence.”
The sales slowdown has InfoNation predicting new vehicle sales across the Houston region may fall short of the 300,000 benchmark this year. Local dealers reported selling 303,417 new vehicles in 2018, up 4 percent from the previous year, according to InfoNation.
So far this year, dealers have sold 191,966 new vehicles, which means they will have to sell more than 27,000 units each month for the remainder of the year to crack the 300,000 mark. Sales have approached or surpassed 27,000 just twice this year, in January and April.
“We may not hit the (300,000) mark this year, just looking at sales for the past eight months,” McDowell said. “This year has been wobbly.”
New vehicle sales are slowing, even as auto loan interest rates have stabilized in recent months and automakers have sweetened deals to draw buyers. The annual percentage rate on new financed vehicles averaged 5.8 percent in August, the second consecutive month in which rates fell below 6 percent, according to Edmunds. Ford earlier this year began offering zero-percent financing for 72 months on its popular F-150 pickup truck.
“Shoppers who made it to the dealership this Labor Day weekend got to take advantage of slightly more generous offers than we’ve been seeing all year, but this shouldn’t be taken as a sign of a dramatic turnaround in the market,” said Jessica Caldwell, executive director of industry analysis for Edmunds, a California-based provider of national automobile data.
Sales are slowing as new vehicle prices continue to rise, forcing many consumers to drive their vehicles longer or skip the new car lot in favor of used vehicles. The average retail price of a new vehicle sold in the Houston area last month was $39,010, up from $38,977 in July. Sedans averaged $33,043 while SUVs and trucks averaged $41,214, according to InfoNation.
Local dealers expect the new vehicle market will continue to soften the rest of the year, especially with growing signs of a downturn in the national economy.
Nationally, dealers sold nearly 17.3 million new vehicles last year, an increase of just 0.3 percent from 2017. Edmunds expect 16.6 million vehicles will be sold this year.