By Nick Carey
DETROIT (Reuters) - U.S. auto sales in July likely fell a little more than 5 percent from the same month in 2016, a fifth consecutive month of declining sales and the largest monthly drop so far this year despite persistently large consumer discounts, industry consultants J.D. Power and LMC Automotive said on Thursday.
LMC cut its full-year 2017 forecast for new vehicle sales for the fourth consecutive month, to 17.0 million units from its previous forecast of 17.1 million.
July U.S. new vehicle sales will be about 1.44 million units, a drop of more than 5 percent from 1.52 million units a year earlier, the consultancies said.
The forecast was based on the first 18 selling days of July. Automakers will release U.S. sales results for the month on August 1.
The seasonally adjusted annualized rate for the month will be 17.2 million vehicles, down nearly 4 percent from 17.9 million units in the same month in 2016.
Retail sales to consumers, which do not include multiple fleet sales to rental agencies, businesses and government, were also set to decline more than 5 percent in June.
U.S. sales of new cars and trucks hit a record high of 17.55 million units in 2016. But a saturated market, thanks partly to a glut of nearly-new used vehicles, has forced automakers to hike discounts to entice consumers to buy.
Consumer discounts hit a monthly record of $3,876, above the previous record of $3,597 set in July 2016.
Auto loans of 84 months and longer accounted for more than 6 percent of retail sales for the first time ever, the consultancies said. In order to sell cars in a tougher market, automakers or lenders can resort to longer loan terms in order to bring the monthly payment down for consumers.
Despite the high level of consumer discounts, the average new vehicle sold in July had spent 72 days in inventory. This was the highest level since 2009 during the height of the Great Recession.
"The second half of the year will continue to present challenges to manufacturers as they navigate a hyper competitive and dynamic marketplace, while working to find the optimal mix of production cuts and discounting necessary to align supply, demand and inventory levels," Thomas King, J.D. Power's vice president of PIN OEM operations, media and marketing, said in a release accompanying the sales estimate.