J.D. Power and Associates Reports: August New-Vehicle Retail Selling Rate Edges Up From July

WESTLAKE VILLAGE, Calif., Aug. 18, 2011 /PRNewswire/ -- New-vehicle retail sales for August have yet to spark a stronger recovery, but the selling pace continues to increase slowly from its low point in May, according to J.D. Power and Associates, which gathers real-time transaction data from more than 8,900 retail franchisees throughout the United States.

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Retail Light-Vehicle Sales

August new-vehicle retail sales are projected to come in at 898,000 units, which represents a seasonally adjusted annualized rate (SAAR) of 9.9 million units. The retail selling rate is higher than in July, although volume remains essentially flat. Retail transactions are the most accurate measurement of true underlying consumer demand for new vehicles.

"The selling rate in August is expected to be slightly stronger than in July, but 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," said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. "There is little question that a strong level of pent-up demand exists, but economic and financial uncertainty is keeping it from being released."

Total Light-Vehicle Sales

Total light-vehicle sales in August are expected to come in at 1,074,900 units, which is just 4 percent higher than in August 2010. Like July, August is normally a low fleet month, with sales of 177,000 units expected—which is 16 percent of total sales.

J.D. Power and Associates U.S. Sales and SAAR Comparisons

(1) Figures cited for August 2011 are forecasted based on the first 11 selling days of the month.

(2) The percentage change is adjusted based on the number of selling days (26 days vs. 25 days one year ago).

Sales Outlook

Given the recovery stall that continues to persist and lower expectations for growth in the economy, J.D. Power is lowering its forecast for light-vehicle sales in 2011 and 2012, as the slower recovery is expected to extend into next year. Total light-vehicle sales for 2011 are now expected to come in at 12.6 million units. This is still a 9 percent increase from 2010, but is down from the previous forecast of 12.9 million. Retail light-vehicle sales are now forecasted at 10.2 million units for 2011 (from 10.5 million).

For 2012, the outlook for total light-vehicle sales has been reduced to 14.1 million units (from 14.7 million). Retail light-vehicle sales are now at 11.5 million units (from 12 million).

"The economy and automotive industry continue to wrestle with a series of unsettling developments, which are now likely too strong to overcome within 2011," said John Humphrey, senior vice president of automotive operations at J.D. Power and Associates. "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."

North American Production

Light-vehicle production in the North American region has increased by 8 percent through the first seven months of 2011 from the same period in 2010, with volume of 7.3 million units. At the country level, production in Mexico is showing the strongest year-over-year change, rising 16 percent with the addition of the Fiat 500, Ford Fiesta and new VW Jetta models. The U.S. follows Mexico with an 8 percent increase, while volume in Canada is off 1 percent—hurt by production losses from Honda and Toyota.

Vehicle inventory has decreased to a 49 days' supply at the beginning of August, down from a 54-day level in early July, mainly due to the typical July shutdown at many of the assembly plants last month. Car inventory was at 40 days, while truck supply was at 58 days—both low for their respective norms. Several manufacturers continue to have limited availability: Hyundai/Kia with a 19 days' supply and Honda with a 28 days' supply. Production continues to support inventory replenishment, but it likely won't be until October before closer-to-normal industry levels (60 to 65 days) are reached.

The 2011 North American production outlook has been trimmed slightly, but it continues to round to 12.9 million units. The decrease is the result of the reduction in the outlook for vehicle sales, but it is not as severe due to the current low level of inventory. Had the sales pace returned to the strength shown at the beginning of 2011, production would have needed to be increased in order to meet the demand and replenish inventory levels by the end of the year.

About J.D. Power and Associates

Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services company providing forecasting, performance improvement, social media and customer satisfaction insights and solutions. The company's quality and satisfaction measurements are based on responses from millions of consumers annually. For more information on car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit JDPower.com. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.

About The McGraw-Hill Companies

Founded in 1888, The McGraw-Hill Companies is a leading global financial information and education company that helps professionals and students succeed in the Knowledge Economy. With leading brands including Standard & Poor's, McGraw-Hill Education, Platts energy information services and J.D. Power and Associates, the Corporation has approximately 21,000 employees with more than 280 offices in 40 countries. Sales in 2010 were $6.2 billion. Additional information is available at http://www.mcgraw-hill.com.

J.D. Power and Associates Media Relations Contacts:
John Tews; Troy, Mich.; (248) 312-4119; [email protected]

Syvetril Perryman; Westlake Village, Calif.; (805) 418-8103; [email protected]

No advertising or other promotional use can be made of the information in this release without the express prior written consent of J.D. Power and Associates. www.jdpower.com/corporate

SOURCE J.D. Power and Associates