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September 29, 2009

US SALES PREVIEW: After clunkers cash, a decline

US light vehicle sales appear likely to have fallen back this month to the nearly 30-year lows of early 2009 after the ending of the government 'cash for clunkers' incentives that boosted August volume.

US light vehicle sales appear likely to have fallen back this month to the nearly 30-year lows of early 2009 after the ending of the government ‘cash for clunkers’ incentives that boosted August volume.

After almost 700,000 new cars and trucks were bought through the US ‘clunkers’ programme from late July into the first three weeks of August, industry inventories were left at historically low levels, and the end of the programme and a shortage of key vehicles at dealerships reduced sales in the first half of September though there have been some signs of sales improving late in the month, Reuters reported.

“We have started to get little rumblings that maybe the consumer isn’t quite so flat on their back, that they have been responding to some of the incentive programmes and the fact that leasing is coming back,” IHS Global Insight automotive research director Rebecca Lindland told the news agency.

Lindland said the General Motors 60-day return guarantee programme had attracted consumer attention, Chrysler’s return to leasing earlier in September should provide support and other automakers had brought back some incentives.

“There are some little tiny slivers of hope,” she said, adding: “There are still a lot of obstacles out there. I think we are still going to see the hangover from ‘cash for clunkers’ both in September and almost potentially through [to] the end of the year.”

US light vehicle sales rose 1% year on year to over 1.2m vehicles in August under the ‘clunkers’ scheme, the first time monthly sales passed 1m in a year.

But none of the largest manufacturers were expected to post sales gains in September, Reuters said, adding that analysts had forecast a 23% industry sales decline for the month.

The August sales gain represented a seasonally adjusted annualised rate (SAAR) of 14.1m vehicles, but did little to turn the tide on annual sales which were down nearly 28% to the end of August compared with the first eight months last year.

Global Insight expects US September sales to reach a 9.33m SAAR, well below the 12.5m a year ago when credit markets froze in the wake of the Lehman Brothers collapse, Reuters said.

The median forecast for US auto industry sales was 9.5m vehicles from 41 economists surveyed by Reuters, while J.P. Morgan believes the annualised rate could drop to 8.9m – the lowest month since December 1981.

“We continue to believe [SAAR] will hover around 9m through [to] year-end, but we remain confident in a gradual recovery in the first half of 2010 given strong evidence of a bottoming pre-clunkers,” JP Morgan analyst Himanshu Patel said in a note to clients cited by Reuters.

JD Power and Associates expects a 9.2m SAAR but believes improving consumer confidence and credit conditions could rebuild retail sales in the coming months.

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