With 10 of the 12 Federal Reserve districts discussing new- and used-vehicle sales activity, the latest Beige Book highlighted that metal rolling over the curb generally was steady in April and May. On Wednesday, the Fed reported through its district-by-district rundown that looking at overall sales, truck and large vehicle turns outpaced car sales across many districts.
The Cleveland district was one of the shining stars from the latest reporting period as sales grew 1 percent over a year ago, with light trucks and SUVs dominating purchases. Truck purchases were strong in the Richmond district, too.
Still, pockets of the country suffered some sales softening, especially the Philadelphia, Atlanta and Kansas City districts.
Looking long term, Fed dealer contacts in the Philadelphia, St. Louis and Dallas districts reported an optimistic outlook for annual auto sales in 2016, due mostly to low gas prices.
Here are additional particulars from the 10 Federal Reserve districts that mentioned sales in more detail as a part of the latest Beige Book:
The Fed noted that new-vehicle sales in upstate New York are reported to be steady at a fairly high level in April, though there were scattered signs of softening in early May.
“Inventories of new vehicles are reported to be somewhat on the high side for this time of year,” officials reported.
Meanwhile, the Fed determined sales of used vehicles were also described as steady in April with some signs of a pickup in May.
“While credit conditions generally remain in good shape, one contact notes some tightening at the low end,” the Beige Book said.
Overall, Third District dealers reported that light vehicle sales have slowed somewhat during the current period.
“Some dealers suggested that early May sales appeared to be coming back,” the Fed said. “Others expressed concerns that sales have begun to slow from recent peaks.
“Dealers mentioned that lack of inventory, aggravated by high recall levels, has constrained supply,” the report continued.
The Beige Book also mentioned that “record” numbers of off-lease vehicles coming back to the used-vehicle market has lowered demand for new-car sales.
“Dealers hope that total 2016 sales may still eclipse 2015, in part, due to greater use of manufacturers' incentives,” the Fed said.
As mentioned previously, the Fed found that year-to-date sales through April of new vehicles rose 1 percent district-wide compared to those of a year ago. Purchases of light trucks and SUVs continue to dominate the market.
For luxury brands, the report indicated weakening demand that began early in 2016 continued into April.
“Although new-vehicle sales are expected to remain stable at high levels this year, dealers reported that fleet sales are rising, while retail transactions have flat lined or declined,” officials said.
“Transaction prices were stable during the past couple of months, and leasing remains very popular. Dealer payrolls increased along seasonal trends,” they added.
The Beige Book said vehicle sales remained fairly strong but have started to slow, according to dealers and an industry expert, while motorcycle sales were sluggish.
Officials added that retail prices rose slightly faster, although increases were moderate overall.
Dealers told the Fed that sales of light trucks and larger vehicles had softened slightly from previously high levels.
“The outlook among district merchants remains generally optimistic,” the Fed said.
The Fed found that sales of new and used vehicles remained “robust” and “strengthened further” in recent weeks, helped by “more generous” incentives.
Dealers also noted that leasing activity was especially strong. The Fed added that average overall transaction prices moved higher as the vehicle mix continued to shift toward larger, more expensive vehicles, and because of greater demand for high-tech options.
The Fed shared that reports from dealers were mainly positive. Most dealers noted sales were in line with 2015 levels, and several Memphis used-vehicle dealers reported record sales for the month.
Multiple dealers also noted a shift in demand toward more high-end vehicles.
“Contacts continued to report the beneficial impact of low gasoline prices and low interest rates,” the Fed said.
The Fed highlighted that a dealership in central South Dakota reported that sales over the last quarter were up 60 percent since this time last year while its used-vehicle sales have nearly doubled.
Officials found that vehicle sales continued to decline at a “moderate” pace and remained below year-ago levels, although dealer contacts expected a “modest” pickup in sales for the months ahead.
The Fed also noted that vehicle inventories decreased but were expected to rise slightly in coming months.
The Beige Book indicated sales held fairly steady at “very high” levels and were up slightly from year-ago levels.
“However, a few contacts noted that the contraction in the energy sector was affecting sales,” the Fed said.
Officials added that trucks and SUVs were outselling cars. Inventories were generally at desired levels, although one dealer mentioned they were a little short on trucks.
“Contacts expect good sales volumes in the upcoming quarter but for margins to remain under pressure,” the Fed said. “The outlook is for strong sales in 2016, down very slightly from record highs reached in 2015.”