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J.D. Power: New-Vehicle Sales Up for July

July 26, 2011

WESTLAKE VILLAGE, Calif. — Month-to-date new-vehicle retail sales for July are stronger than the last two months but remain below the recovery pace set earlier this year, according to J.D. Power and Associates.

The company anticipates July new-vehicle retail sales to reach 913,900 units, representing a seasonally adjusted annualized rate (SAAR) of 9.8 million units. The retail selling rate is expected to improve from June, but faces pressure from notably low but improving inventory levels and flat incentive levels compared with June, according to J.D. Power.

“While July’s selling rate is slated to finish higher than June, consumers continue to face obstacles in their willingness and ability to purchase a new vehicle,” said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. “The ongoing debate regarding the debt ceiling and stagnant economy are creating added pressure on top of a generally weaker vehicle sales environment.”

Total light-vehicle sales in July are expected to reach 1,087,600 units, an 8 percent increase over July 2010. J.D. Power officials note that fleet deliveries are typically low in July and are expected to represent 16 percent of total sales at 174,000 units for the month.

Retail light-vehicle sales in the second half of 2011 are expected to average 10.7 million units, up from 10.3 million during the first half of the year. Including fleet sales, the total light-vehicle selling rate also is expected to be stronger during the second half of 2011 at 13.2 million units, up from 12.5 million during the first half of the year.

J.D. Power’s 2011 retail light-vehicle forecast remains at 10.5 million units. Its forecast for total light-vehicle sales remains at 12.9 million units, according to the company.

“While the second half of 2011 is expected to regain momentum from earlier in the year, light-vehicle sales in July have yet to set the expected pace for a more robust recovery,” said John Humphrey, senior vice president of automotive operations at J.D. Power and Associates. “However, with improvements in inventory and continued increases in credit availability, we remain optimistic that the recovery will get back on track as the industry manages through the current environment.”

North American production through the first half of 2011 increased 8 percent from the same period in 2010, with 6.4 million light vehicles produced compared to 5.9 million units in the first half of 2010.

Japanese automakers are seeing production return to normal levels in North America and are expected to quicken their recovery pace through the second half of 2011, according to J.D. Power. North American light-vehicle production is forecasted at 12.9 million units for 2011, an increase of 9 percent from 2010.

Vehicle inventory increased to a 54 days-supply at the beginning of July, up from a 49-day level in June. Car inventory started the month at a 43 days-supply, while trucks were at 67 days-supply.

Compact models such as the Toyota Prius, Ford Focus and Honda Civic have inventory levels of fewer than 25 days and may experience limited sales due to the low availability, according to the market research firm.

Production of the 2012 model-year vehicles continues to increase, with 2012 model-year vehicles accounting for nearly 12 percent of retail market sales through mid-July. Hyundai, which represented 42 percent of July’s month-to-date retail sales, and Ford, which accounted for 16 percent, have the highest mix of new model-year vehicles to date.

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