Email List Sign Up

July selling rate bodes well for ’09 auto sales

Sunday, July 26, 2009

July selling rate bodes well for ’09 auto sales

Christine Tierney and Bryce G. Hoffman / The Detroit News

U.S. auto sales have gathered pace this month, bolstering expectations that the auto market is starting to recover from 25-year lows in the first half of the year.

Several forecasters predict that the annualized selling rate for July will exceed 10 million vehicles for the first time this year.

That pace is likely to increase after the government’s $1 billion cash-for-clunkers incentive program goes into effect on Monday.

Online auto research site predicts that sales in July will total 950,000 cars and light trucks.

While that would be 16.3 percent lower than last July’s sales, it would represent an increase in the annualized selling rate to nearly 10.5 million vehicles from less than 10 million in each of the first six months of 2009.

Edmunds analyst Jesse Toprak attributes part of the improvement to traditional summer sales. "Glimmers of hope about the economy and the buzz generated by the cash-for-clunkers program are also working in the auto industry’s favor," he said.

The cash-for-clunkers program is designed to increase demand and get some of the most environmentally unfriendly vehicles off the road by rewarding consumers with a federal rebate of up to $4,500 for swapping older vehicles for new models.

With $1 billion in funding, it will help to finance around 250,000 vehicle sales directly. But analysts say the buzz generated by the program and automakers’ additional incentives will probably boost sales further. Chrysler Group LLC, for example, is offering an additional $4,500 rebate of its own.

Edmunds predicts that Hyundai Motor Co., which is already offering its own cash-for-clunkers deals, will record an 8 percent sales rise for July from prior-year levels.

Several auto executives and industry analysts report rising showroom traffic, suggesting that shoppers who were holding off may be ready now to buy.

"We already see little signs of improvement," said Yoshimi Inaba, chairman of Toyota Motor Sales USA. He said Toyota’s U.S. dealers were seeing more prospective shoppers.

"Some leading indicators are providing encouraging signs," Ford Motor Co. Chief Executive Alan Mulally said Thursday during the company’s earnings teleconference. "Financial markets remain challenging but have improved in recent weeks."

Ford expects the market to recover slightly in the second half, resulting in full-year sales between 10.5 million and 11 million, compared with 13.2 million last year and 16.1 million in 2007.

Forecasting firm J.D. Power and Associates estimates the selling rate in July at 10 million units, or 8.2 million excluding sales to rental companies and other fleet customers.

Financial analysts were cautiously optimistic. "We’re not saying auto sales are ready to take off for the moon," said JPMorgan analyst Himanshu Patel. But, he added, "we are seeing signs of a modest recovery taking hold."

JPMorgan estimates this month’s selling rate at 9.9 million cars and light trucks.

Investment firm Deutsche Bank estimates that underlying demand is close to June levels, when the selling rate was 9.7 million units. But it expects a late-month surge from cash-for-clunkers deals to boost the rate to 10.2 million vehicles in July.

Deutsche Bank analyst Rod Lache estimates Ford will again perform better than the industry as a whole and post a 10 percent sales decline in a market forecast to shrink 21 percent.

General Motors Co. executives said sales were soft in July, with many customers holding off in anticipation of the cash-for-clunkers deal.

"We’re all at the starting gate ready to go, programs and Web sites are locked and loaded, the question is will consumers respond?" said Mike DiGiovanni, GM’s executive director of global market and industry analysis.

Seniority Lists
Recent Posts!
Bargaining Committee

Mike Herron
Tim Stannard
Zone at Large – 1st
Danny Taylor
Zone at Large – 2nd
Mark Wilkerson
Joe McClure
Chad Poynor
Steve Roberts
Derek Lewis
Bill Cundiff
Kirk Zebbs
Don Numinen
Jay Minella
Danny Bragg
Chris Hill
Rashad Thomas
Keith Oswald
Chris Brown

1853 Officers

Tim Stannard
Mike Herron
Vice President
Darrell DeJean
Financial Secretary
Mark Wunderlin
Recording Secretary
Peggy Mullins
Trustee (3)
Jay Lowe
Dave Clements
Dave Spare
Sgt. at Arms
David C Spare
Ashley Holloway
E-Board at Large (2)
David Ryder
Steve Roberts
GM Unit Chair
Mike Herron
Leadec Unit Chair
Larry Poole
Ryder Unit Chair
Patrick Linck
AFV Unit Chair
Neil Osborne
Retiree Chair
Mike Martinez

Get Text Alerts


*Standard text messaging rates may apply from your carrier