Sales Pace Slowing in August, Reports J.D. Power

WESTLAKE VILLAGE, Calif. — The selling rate for new-vehicle retail sales continued to improve in August from its low point in May, but the pace is slowing, according to J.D. Power and Associates.

August new-vehicle retail sales are projected to come in at 898,000 units, representing a seasonally adjusted annualized rate (SAAR) of 9.9 million units, according to the company. But despite the sales rate improving from July, volume remains relatively flat.

"The selling rate in August is expected to be slightly stronger than in July, but without a significant increase in incentive levels or a reversal of the economic woes, there isn't a compelling reason for those consumers sitting on the fence to return to dealer showrooms and purchase a vehicle," said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. "There is little question that a strong level of pent-up demand exists, but economic and financial uncertainty is keeping it from being released."

The research firm anticipates total light-vehicle sales in August will come in at 1,074,900 units, a 4 percent increase vs. August 2010. As is the case in July, August is normally a low fleet month, with sales of 177,000 units expected, or 16 percent of total sales.

Citing the recovery stall and lower expectations for economic growth, J.D. Power and Associates has lowered its forecast for light-vehicle sales in 2011 and 2012. Total light-vehicle sales for 2011 are expected to increase 9 percent year over year to 12.6 million units, about 300,000 units lower than the previous forecast of 12.9 million. Retail light-vehicle sales are forecasted at 10.2 million units for 2011, down from 10.5 million. For 2012, the outlook for total light-vehicle sales has been reduced to 14.1 million units from 14.7 million.

"The economy and automotive industry continue to wrestle with a series of unsettling developments, which are now likely too strong to overcome within 2011," said John Humphrey, senior vice president of automotive operations at J.D. Power and Associates. "While it is not time to hit the panic button, it is clear that ascending from the recession is proving to be just as bumpy as the decline into it, and a full recovery in vehicle sales is further down the road than previously thought."