J.D. Power and Associates Reports: Weakness in June New-Vehicle Retail Sales is Partially Offset by Fleet Replenishment

Jun 24, 2010, 09:34 ET from J.D. Power and Associates

WESTLAKE VILLAGE, Calif., June 24 /PRNewswire/ -- An increase in fleet sales in June is not strong enough to fully offset weaker-than-expected retail sales, resulting in a decline in the total new-vehicle selling rate from 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

June new-vehicle retail sales are expected to come in at 768,000 units, which represents a seasonally adjusted annualized rate (SAAR) of 8.6 million units. June's selling rate is expected to be down from May's selling rate of 8.9 million units, but up from a selling rate of 8.2 million units in June 2009. Retail transactions are the most accurate measurement of true underlying consumer demand for new vehicles.

"With the improving economic environment, retail sales should be stronger than they currently are, but June marks the second consecutive month with a selling rate below 9 million units," said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. "In spite of the more favorable conditions, it appears that consumers remain skittish and have yet to respond by buying vehicles at expected levels."

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

(in millions of units)

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Total Light-Vehicle Sales

Fleet sales in June are again expected to offset some of the weakness in the retail market, with volume projected to total 203,000 units—up 59 percent from June 2009. As a result, total light-vehicle sales for June are expected to come in 971,000 units, up 13 percent from one year ago.

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

June 2010(1)

May 2010

June 2009

New-vehicle retail sales

768,000 units

(5% higher than June 2009)

847,138 units

730,627 units

Total vehicle sales

971,000 units

(13% higher than June 2009)

1,100,565 units

857,952 units

Retail SAAR

8.6 million units

8.9 million units

8.2 million units

Total SAAR

10.9 million units

11.5 million units

9.7 million units

(1) Figures cited for June 2010 are forecasted based on the first 16 selling days of the month.

Sales Outlook

Given the continued weakness in the retail market, J.D. Power and Associates is decreasing its retail sales forecast slightly to 9.5 million units (from 9.7 million units). The forecast for total sales remains at 11.8 million units.

"With the recovery not progressing as expected, it's gut-check time for the automotive industry," said Schuster. "The industry's discipline will be put to the test even more in the coming months if a more pronounced recovery doesn't get underway."

North American Production

Despite wavering sales, North American vehicle production continues to experience significant increases in year-over-year volume. Light-vehicle production in May 2010 totaled more than 1 million units, up 85 percent from May 2009. Production in June is expected to be strong, with the second quarter ending at 3 million units—up 68 percent compared with the same period in 2009.

Inventory levels remain favorable, with days supply at the end of May decreasing to 49 days—8 days lower than at the end of April. As a result, the forecast for North American light-vehicle production in 2010 has increased to 11.4 million units (from 11.2 million units), up 34 percent from 2009.

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:

John Tews; Troy, Mich.; (248) 312-4119; 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