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Power predicts August retail sales rate of 9.9 million units

AUGUST U.S. AUTO SALES
Power predicts August retail sales rate of 9.9 million units
Joseph Lichterman
Automotive News | August 18, 2011 – 10:45 am EST

DETROIT — Following the trend of the past few months, U.S. sales of new vehicles have continued to increase slowly in August, but have not yet initiated a strong recovery in the industry, research firm J.D. Power and Associates said today.

The seasonally adjusted sales rate in the retail market is expected to be 9.9 million units this month, based on data from 8,900 dealers nationwide, J.D. Power said. The August SAAR, up from 9.5 million in June and July, is still lower than earlier this year before the industry was ravaged by inventory shortages resulting from the March 11 earthquake in Japan.

Through May, the retail SAAR ranged from a high of 11 million in February to a low of 9.2 million in May.

While the retail SAAR is up slightly this month, sales volume has remained virtually stagnant from July to August as consumers have been reluctant to purchase vehicles in light of the debt ceiling debate in Washington, a lack of manufacturer rebates and the volatile economy, Jeff Schuster, executive director of global forecasting at J.D. Power said in a statement.

“Without a significant increase in incentive levels or a reversal of the economic woes, there isn’t a compelling reason for those consumers sitting on the fence to return to dealer showrooms and purchase a vehicle,” Schuster said. “There is little question that a strong level of pent-up demand exists, but economic and financial uncertainty is keeping it from being released.”

J.D. Power projects total retail sales of 898,000 vehicles this month, up slightly over 892,195 units sold in July.

Dealers, meanwhile, are worried that the downturn in the economy could limit their earnings and slow growth.

“If it keeps going this way, yes, it’s going to hurt business,” Jerry Seiner, who runs a group of dealerships in the Salt Lake City area that includes General Motors, Nissan and Kia, told the Associated Press.

J.D. Power also lowered its forecasts for total and retail sales for 2011 and 2012. J.D. Power now predicts that total light-vehicle sales, including fleet, will total 12.6 million units this year, which would be a 9 percent increase from 2010 but down from an earlier projection of 12.9 million units. The retail outlook for 2011 is now at 10.2 million; previously J.D. Power predicted retail sales of 10.5 million vehicles.

Power reduced its forecast for total vehicle sales in 2012 to 14.1 million units, down from 14.7 million. Retail light-vehicle sales are now projected at 11.5 million units next year.

“The economy and automotive industry continue to wrestle with a series of unsettling developments, which are now likely too strong to overcome within 2011,” John Humphrey, senior vice president of automotive operations at J.D. Power said in a statement. “While it is not time to hit the panic button, it is clear that ascending from the recession is proving to be just as bumpy as the decline into it, and a full recovery in vehicle sales is further down the road than previously thought.”

Total light-vehicle sales this month are expected to be 1.07 million, 4 percent higher than August 2010, J.D. Power said. August typically is a slow month for fleet sales. Sales of 177,000 fleet vehicles are expected this month, which would be 16 percent of the total.

Automakers are scheduled to announce August U.S. Sales on Sept. 1.

Photo credit: J.D. Power and Associates

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