Key facts
- US light vehicle sales declined to a 16.3 million unit annual rate in July.
- This marks a decrease from the 16.6 million unit rate in June.
- Rising fuel prices and potential Federal Reserve rate hikes are impacting consumer affordability.
- Average US retail gasoline prices increased by 8% in early August.
- There is a 53% probability of a quarter-point rate hike by the Federal Reserve in September.
US automotive sales experienced a slowdown in July, falling to a seasonally adjusted annual rate of 16.3 million units from a revised 16.6 million in June. This dip follows the year's highest sales figure in June. The decline occurred despite continued spending by affluent consumers, who benefited from rising equity markets. However, affordability concerns are mounting due to renewed inflationary pressures, including an 8% increase in average US retail gasoline prices to $4.079 per US gallon in early August. These pressures stem partly from the resumption of hostilities between the US and Iran, which disrupted a previous ceasefire agreement in the Middle East. The market is pricing in a 53% probability of a quarter-point interest rate hike by the US Federal Reserve at its September meeting, as policymakers aim to curb inflation that remains significantly above the 2% target. Sales of pickup trucks saw a 1.8% decrease in July to a 13.6 million unit annual rate, while car sales edged up by 0.6% to a 2.7 million unit rate. US vehicle production, reported with a one-month lag, increased to a seasonally adjusted rate of 10.68 million units in June.