(Reuters) - U.S. auto sales are expected to drop 1.8% in July from a year earlier, as higher prices continue to keep buyers away, according to industry consultants J.D. Power and LMC Automotive.
The consultancies estimate total U.S. vehicle sales of about 1.40 million units in July, with retail sales of new vehicles expected to drop 2% to 1.18 million units on a selling day adjusted basis, compared with a year earlier.
Despite the expected decline in sales, overall vehicle prices are seen touching new records in July, driven by buyers paying more for recently launched sports utility vehicles (SUVs).
"July will be another month of modest sales declines but with high vehicle expenditures as the average new vehicle sales price exceeds $33,000, up over $1,400 from July 2018," Thomas King, senior vice president of the data and analytics division at J.D. Power, said in a statement on Monday.
Average new vehicle retail transaction prices for July are on pace to reach $33,065, up from $31,767 a year ago, according to the consultants.
The average number of days a new vehicle remains with dealers before being sold to a retail customer are 73 days through July 21, up six days from a year earlier, while industry incentive spending is on pace to exceed $4,000 per unit for the month, the highest level since December 2018, the consultancies said.
"While trade risk remains a threat, transaction prices continue to rise and economic growth is moderating, sales in the second half of the year could outperform expectations," Jeff Schuster, president of LMC Automotive's Americas operations and global vehicle forecasts, said in the statement.
The two consultancies increased their forecast for 2019 total light-vehicle sales by 40,000 units to 17 million units, a 1.9% fall from the previous year.
J.D. Power and LMC Automotive reaffirmed their retail light-vehicle sales forecast of 13.5 million units, a 3% fall from 2018.