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J.D. Power Revises Forecast, 'Low Point' Expected in February or March

February 27, 2009

WESTLAKE VILLAGE, Calif. — Retail new-vehicle sales in the first 22 days of February were down nearly 38 percent compared with the same period one year ago, according to J.D. Power and Associates, which gathers real-time transaction data from more than 10,000 dealerships across the United States.

February’s new-vehicle retail sales are expected to come in at 580,000 units, down 34 percent compared to 913,000 units a year ago, with the volume adjusted for differences in the numbers of selling days for each period. To better reflect consumer demand for new vehicles, J.D. Power and Associates focuses on retail sales, which include only dealership sales and leases to private parties and do not include fleet sales.

Total sales for the month of February are forecasted to come in at a seasonally adjusted annualized rate (SAAR) of 9.1 million units. This represents a 39 percent decline from one year ago, but a 14 percent gain from January 2009, selling day adjusted.

“All automakers are feeling the economic pressure and the effects of record-low consumer confidence,” said Gary Dilts, senior vice president of global automotive operations at J.D. Power and Associates. “Each one of the 10 major new-vehicle manufacturers suffered a retail sales decline in early February, compared with one year ago.”

Reflecting the continued pressures facing the U.S. new-vehicle market, J.D. Power and Associates has revised its total new light-vehicle sales forecast for 2009 to 10.4 million units from the previous forecast of 11.4 million units.

Since December 2008, several industry and economic variables affecting the 2009 outlook for light-vehicle retail sales have changed notably, leading to the downward adjustment. These factors include decaying GDP growth rates, rising unemployment, pressure on housing prices and continued tight credit. In addition, because the recently passed economic stimulus package does not include provisions for income checks to be sent to individual households, it is not expected to have a measurable positive impact on 2009 retail new-vehicle sales.

“The crisis in the automotive market continues to worsen, but we believe we are nearing the bottom of this cycle,” said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. “Our expectation is for February or March to be the low point, but a high degree of uncertainty and risk remains for the second half of 2009 if the various factors that are currently impacting automotive sales do not improve or stabilize.”

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