DETROIT, June 26 (Reuters) - U.S. auto sales in June likely fell 2 percent from a year earlier despite large discounts for consumers, presenting a fresh sign that automakers are heading into a downturn, industry consultants J.D. Power and LMC Automotive said on Monday.
LMC also cut its full-year 2017 forecast for new vehicle sales for the third consecutive month, to 17.1 million units from its previous forecast of 17.2 million.
June U.S. new vehicle sales will be about 1.48 million units, a drop of 2 percent from 1.51 million units a year earlier, the consultancies said.
The forecast was based on the first 15 selling days of the month. Automakers will release June U.S. sales results on July 3.
The seasonally adjusted annualized rate for the month will be 16.5 million vehicles, down nearly 2 percent from 16.8 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 set to decline more than 1.3 percent in June.
U.S. sales of new cars and trucks hit a record high of 17.55 million units in 2016. But the market has begun to saturate thanks partly to a glut of nearly-new used vehicles, forcing automakers to hike incentives to entice consumers to buy.
Fears of a downturn were heightened earlier this month when automakers posted their third consecutive month of declining sales. Annualized sales fell to 16.66 million cars and light trucks in May from 17.17 million vehicles a year earlier.
"As the U.S. auto market enters the fourth month in a row of a sub-17 million unit selling rate, nerves are being tested," Jeff Schuster, senior vice president of forecasting at LMC Automotive, said in a release. "It will be challenging in the second half of the year to keep pace with 2016 ... but a year still expected above 17 million units should not be considered a poor performance."
The consultancies said consumer discounts averaged $3,661 per vehicle, a record for the month.
But the average transaction price also hit a record for the month of $31,720.
Discounts as a percentage of the manufacturer's recommended sale price remained at 10 percent in June, a level industry experts say is unsustainable.
Inventory levels at major automakers have also raised concerns.
The average number of days a new vehicle sits on a dealer's lot before sale remained at 70 through the first 15 days of June. (Reporting By Nick Carey; Editing by Phil Berlowitz)