J.D. Power and Associates Reports: July New-Vehicle Retail Sales Rebound Sharply From Weak June Sales, Driven by a Multitude of Small Wins

Jul 22, 2010, 09:21 ET from J.D. Power and Associates

WESTLAKE VILLAGE, Calif., July 22 /PRNewswire/ -- After weaker sales in May and June, new-vehicle retail sales are expected to bounce back in July as a result of a combination of positive factors, 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

July new-vehicle retail sales are expected to come in at 928,000 units, which represents a seasonally adjusted annualized rate (SAAR) of 9.4 million units. July's selling rate is expected to increase considerably from June's selling rate of 8.4 million units. While July's selling rate is also up from 8.9 million units in July 2009, year-over-year comparisons are not as relevant due to distortion from the CARS program in 2009. Retail transactions are the most accurate measurement of true underlying consumer demand for new vehicles.

"Consumers appear to be responding to the slight increase in visible incentive spending, which is expected this time of year during typical model-year selldown," said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. "Even if the deals aren't as strong as they have been in the past, consumers may be grappling with the notion that these deals are as good as they're going to get. In addition, an increase in maturing leases and a less attractive used car market may be contributing to higher sales volumes."

U.S. Retail SAAR from July 2009 to July 2010

(in millions of units)

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Total Light-Vehicle Sales

While fleet sales in the month of July are typically low, fleet sales this month are expected to increase from the extremely low levels in July 2009. As a result, total light-vehicle sales for July are expected to return to levels above 1 million units.

"While a return to a higher selling rate in July is a relief after the pronounced instability during the past few months, it's not yet time to be overly optimistic," said Schuster.

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

July 2010(1)

June 2010

July 2009

New-vehicle retail sales

928,000 units
(2% higher than July 2009) (2)

746,618 units

878,918 units

Total vehicle sales

1,076,300 units
(4% higher than July 2009)

981,429 units

995,977 units

Retail SAAR

9.4 million units

8.4 million units

8.9 million units

Total SAAR

12.2 million units

11.0 million units

11.2 million units

(1) Figures cited for July 2010 are forecasted based on the first 14 selling days of the month.

(2) The percentage change is adjusted based on the number of selling days (27 days vs. 26 days one year ago).

Sales Outlook

Despite the strength in retail sales in July, the recovery pattern for the remainder of the year is expected to continue to be volatile. As a result, J.D. Power and Associates has revised its 2010 forecast downward slightly to 9.4 million units for retail sales (from 9.5 million units) and 11.7 million units for total sales (from 11.8 million units).

"Given the inconsistent nature of the current sales environment and the hurdles the recovering economy has yet to face, the rate of the recovery in auto sales is expected to be slower than previously thought," said Schuster. "This emphasizes the importance of the industry's new cost structure, as sales are projected to be below the normal range of 15 to 16 million units for at least another two years."

North American Production

In the first half of 2010, North American vehicle production was up 72 percent compared with the same period in 2009, as year-to-date 2010 has not been affected by the extended plant shutdowns seen in 2009. However, as 2010 progresses, production in the second half is expected to level off and increase by only 9 percent compared with the second half of 2009.

Vehicle inventory has been maintained at its current disciplined level, with days supply at the end of June increasing slightly to 55 days—6 days higher than at the end of May. The forecast for North American light-vehicle production in 2010 remains at 11.4 million units, up 34 percent from 2009.

North American capacity utilization improves to 65 percent in 2010 as a result of increased production volumes and assembly consolidation. In 2009, the utilization was at a very low 48 percent due to the weak sales and production environment.

About J.D. Power and Associates

Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services company operating in key business sectors including market research, forecasting, performance improvement, Web intelligence and customer satisfaction. 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 (NYSE: MHP) is a global information and education company providing knowledge, insights and analysis in the financial, education and business information sectors through leading brands including Standard & Poor's, McGraw-Hill Education, Platts, and J.D. Power and Associates. The Corporation has more than 280 offices in 40 countries. Sales in 2009 were $5.95 billion. Additional information is available at http://www.mcgraw-hill.com/.

J.D. Power and Associates Media Relations Contacts:

Angela Bianchi; Troy, Mich.; (248) 312-4729; media.relations@jdpa.com

Syvetril Perryman; Westlake Village, Calif.; (805) 418-8103; media.relations@jdpa.com

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SOURCE J.D. Power and Associates