USA: 0% finance drives strong vehicle sales in July - JD Power
A return by automakers to aggressive use of zero-percent financing is driving sales of US light vehicles through the second week in July to a near-record pace, according to JD Power and Associates.
Total new light-vehicle sales in July are projected by JD Power to hit an 18.1 million-unit seasonally adjusted annualised rate (SAAR) -- up from June's 16.5 million SAAR -- based on Power Information Network (PIN) retail sales data from the first two weeks of the month. Light-vehicle sales in July 2001 came in at a 16.5 million SAAR. Actual units sold in July are expected to reach 1.525 million.
JD Power says that aggressive incentives are at the heart of July's sales boom. The industry average total of cash plus interest subvention is nearly $1,400 per vehicle. In October 2001, when sales peaked at a 21.3 million-unit SAAR, manufacturers gave consumers an average of $1,200 per vehicle.
"The current incentives are very aggressive and definitely have consumers out buying new vehicles," said Dr. Walter McManus, executive director of global forecasting at JD Power and Associates. "The summer is usually a slow sales period, and automakers have traditionally increased incentives to make room for new models. We expect this could be one of the top-five highest sales months in history (on a SAAR basis)."
JD Power says it is holding its 2002 calendar-year forecast at 16.5 million units.
"Through June, sales have averaged a 16.5 million-unit SAAR, which is right on track with our forecast," McManus said. "Without occasional jolts of extra consumer support, sales would be falling. The key question now is whether consumers expect the periodic jolts and will stay home between the waves of incentives."