The U.S. new-vehicle market remained relatively stable in July, although signs of a slowing economy are becoming more noticeable. July’s SAAR finished at 16.3 million, down 1.5% from both June and a year ago. Sales totaled 1.364 million vehicles, down 1.8% year over year, while year-to-date sales are 2.3% lower. Fleet demand remains a relative bright spot, with total fleet sales up 4% year to date. Commercial fleet sales are leading the increase at 8%, followed by government at nearly 5% and rental at 1%.

Vehicle affordability remains a challenge. Average transaction prices increased to $49,855 in July, up 1.9% from last year, while incentives dropped 10.1% year over year to $3,192 per vehicle. Hybrid demand continues to stand out, reaching 21.8% of the market based on the latest available powertrain data, compared with 13.3% a year earlier.

Broader economic conditions could create additional pressure on vehicle demand. The economy lost 23,000 jobs in July, and previous months were revised lower, bringing the three-month average to just 20,000 new jobs per month. Consumer credit also weakened, while spending trends have recently slowed. For fleets, softer economic conditions could eventually improve interest rates and vehicle availability, but higher vehicle prices and lower OEM incentives continue to put pressure on acquisition costs.