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Sales Could Improve 5 Percent in September, Reports CNW

September 20, 2011

BANDON, Ore. — September opened up on a positive note, with CNW Research suggesting that the industry might be on track to realize a 5 percent year-over-year increase in retail sales. Despite the increase, the market research firm believes retail sales will fall short of the 1 million-unit mark for the fourth straight month.

Should the industry reach a near 5 percent increase at months’ end, the sales would translate to a 12.15 million-unit delivery rate, Spinella wrote in his monthly e-newsletter.

“Even if it breaks the 1 million-unit mark, it will not be as strong as September 2007‘s 1.3 million, which translated into a 16.3 million-unit delivery rate,” Spinella wrote. “The automakers have a deep hole to dig out of.”

Floor traffic was down 1.33 percent in the first 15 days of September vs. August, but remained above the year-ago figure by 1.23 percent. Spinella attributed the drop from August to back-to-school season, writing that parents are typically busy this time of year preparing their children to return to school.

Spinella also cited the back-to-school season as the reason for the 1.7 percent month-over-month drop in closing ratios. The 5.62 percent year-over-year decline is significant, however, because it indicates a resistance to pricing and an increase in cross-brand shopping, according to the report.

CNW’s Jitters Index, which measures consumer sentiment regarding home-centric economic issues, climbed 5.5 percent vs. a year ago and 6.9 percent vs. August. In addition to concerns about government policymaking issues, many families are apprehensive about federal taxes and investments, including retirement funds.

The good news is finance sources are increasingly subprime consumers for financing, with approval up 11.2 percent vs. last year. However, CNW noted some tightening in credit requirements, with approvals off more than 3 percent compared to last month.

“Unless something dramatic happens between now and December, the industry is likely to sell fewer than 12.4 million units,” Spinella says. “To hit the industry bogie of 12.7 million units, it must sell at a 12.6 million SAAR (seasonally adjusted annual rate) for the rest of the year. Not going to happen.”

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