After a not-so positive start to the month, consumers began returning to showrooms in the second half of July, reported CNW Research. The Bandon, Ore., research firm had initially thrown out the possibility of automakers turning to fleet sales if the slowdown in retail continued through the summer.
CNW Research said full-month floor traffic is on track to increase 2.2 percent in July if things continue to improve. The main driver of the pickup in traffic between July 15 and 22, the firm added, was a 3.6 percent increase in incentives.
Weekend traffic also showed a year-over-year improvement. Closing ratios were still weak during the second half of July at 34 percent, but CNW’s Art Spinella said the pickup in incentives is pushing a larger pool of potential buyers into dealerships.
“Incentives are climbing,” wrote Spinella, who noted a 2.5 percent increase in incentive spending by manufacturers. “Dealers are footing a larger part of the incentive bill, representing a bit more than 1.5 percent versus June. This is still well below a year.”
Average dealer give-back from gross, Spinella added, is at $1,670 per unit.
If the uptick in traffic continues, July sales could reach 1.105 million, a 5.3 percent increase from July 2010. Sales for the month, Spinella added, are pacing at a 12.1 million annualized rate.
During the first few weeks of the month, showroom traffic was on the decline, which CNW attributed to consumers waiting for post-summer incentives drive on the part of manufacturers. The decline raised the prospect of manufacturers once again turning to fleet sales to offset the drop in retail sales.
Part of the problem was a slowdown in auto loan approvals, which Spinella attributed to a 15 percent drop in closing ratios from the year-ago period and an 8 percent drop from June. FICO score also were on the rise, another sign that finance sources were tightening guidelines.