Several indicators in the first few weeks of June, including floor traffic, incentives levels, and closing ratios, point to a rough road ahead for sales this month, according to CNW Research’s latest Retail Automotive Summary.

Compared with last year, floor traffic dropped 5.9 percent for the first half of the month. The report attributed the drop to the impact the March 11 earthquake is having on Japanese import brands. Additionally, closing ratios were down more than 8 percent vs. the same period last year, and 7.7 percent from May. Brands Hyundia-Kia, Ford and Chevrolet were able to buck the negative trend, reported CNW.

“Typically, when floor traffic slips, closing ratios are either flat or up because those who remain in the market are more likely to buy. Put simply, closing ratios should increase against a smaller more motivated base. Not so thus far in June,” CNW’s Art Spinella wrote.

Spinella also noted that confidence levels continue to weaken. CNW’s Jitters index, which measures concerns about home-centric issues, reflected a 1 percent month-over-month increase. The index showed improvement in categories such as “Federal Taxes,” “Child’s Education” and “Investments,” but other key categories, such as “Food Prices” and “Fuel Costs,” worsened.

A look at FICO scores, which registered their first month-over-month increase since January, also revealed just how skittish consumers are. “Two parts to the increase: Lower scoring consumers stayed away from dealerships and, simultaneously, some credit sources tightened up on their approvals,” Spinella wrote. “The increase in FICO may just be a blip, but it is one that the auto industry doesn’t need at the moment.”

The good news is subprime approvals continue to increase, jumping more than 90 percent from record lows in 2010. However, subprime approvals suffered their first month-over-month decline from May to June, with approvals dropping from 10.9 percent to 10.2 percent.

If June sales fall below the 1 million-unit mark for June, Spinella said he expects automakers to increase incentive spending as they did in May. Incentives for the previous month included higher-than-book trade values, cash from profits and discounts for lower scoring customers.

Currently, June sales are running at a 77.5 percent rate, up from May’s 72.4 percent and a recession-low of 52 percent in April 2009. Spinella noted that Ford has pulled back on fleet sales of the all-new Explorer because of heavy consumer demand, while Chevrolet diverted some production from fleet to retail for the same reason. Toyota and Honda dealers have all but stopped deliveries to business fleets at the local level, wrote Spinella.

“May was bad and the month-over-month data show exactly where the problem was. Aside from slow floor traffic and flattening closing ratios, Toyota and Honda supply problems hammered overall sales,” wrote Spinella, who noted that both companies suffered 32 and 27 percent declines in month-over-month sales, respectively. “And now Toyota is saying it may be until the end of the year before production gets back on track. Meanwhile, the Detroit Three took advantage of their Asian rivals’ problems and gained ground in month-over-month sales versus the industry.”