Market analyst JD Power says that US new vehicle retail sales through the first 17 selling days of June have increased notably from May, indicating ‘tempered but continued recovery in the market’.
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New-vehicle retail sales for the month of June are expected by JD Power to come in at 789,400 units, which represent a seasonally adjusted annualised rate (SAAR) of 9.2 million units. This is down by 9 percent from one year ago, but up by 14 percent compared with May 2009.
However, while retail sales for June have improved from May, fleet sales have declined, the firm says.
As a result, the June SAAR for total vehicle sales is put at just 10.3m units compared with 9.8m units in May and 13.6m units in June 2008.
“Consumer confidence is improving, and market uncertainty is starting to decline, which has made consumers more willing to take advantage of deals on new vehicles,” said Gary Dilts, senior vice president of global automotive operations at JD Power and Associates. “In addition, sales incentives—including those from Chrysler dealers facing closure—have helped contribute to the upswing.”
In light of these signs of market recovery and the expected introduction of a “Cash for Clunkers” program, JD Power says it is holding its forecasts for 2009 steady at 8.3m for retail sales and 10m units for total sales.
A more favourable environment in the second half of 2009 could result due to continued sales momentum, improved economic fundamentals and a stronger than expected response to the “Cash for Clunkers” program.
While the program theoretically could increase retail sales by as much as 500,000 units on an annualised basis, JD Power forecasts that actual sales increases would be considerably lower due to funding limitations and the duration of the program.
“It remains to be seen if the passage of Cash for Clunkers program will be enough to draw consumers to showrooms and spark sales, but we remain sceptical,” said Jeff Schuster, executive director of global forecasting at JD Power.
Recovery in the automotive market could also be hampered by instability and insolvency among vehicle suppliers, JD Power said.
Vehicle production is forecast to be as low as 8m units in 2009. JD Power warned that ‘levels this low have not been seen since the 1980s’.
With several tier-one suppliers in or approaching bankruptcy, failure of these large suppliers would create a ripple effect among smaller suppliers. In turn, this could cripple vehicle manufacturers’ ability to replenish vehicle inventory and hamper prospects for any near-term recovery, JD Power said.
