Zero Percent Financing Driving Strong Sales in July: J.D. Power Study
A return by automakers to aggressive use of
zero percent financing is driving sales of U.S. light vehicles through the second week in July to a near-record pace, according to J.D. Power and Associates.
Total new light-vehicle sales in July are projected to hit an 18.1 million-unit seasonally adjusted annualized rate (SAAR) - up from June's 16.5 million SAAR-based on Power Information Network (PIN) retail sales data from
the first two weeks of the month. Light-vehicle sales in July 2001 came in at a 16.5 million SAAR. Actual units sold in July are expected to reach 1.525 million.
Aggressive incentives are at the heart of July's sales boom. The industry average total of cash plus interest subvention is nearly $1,400 per vehicle. In October 2001, when sales pinnacled at a 21.3 million-unit SAAR,
manufacturers gave consumers an average of $1,200 per vehicle.
"The current incentives are very aggressive and definitely have consumers out buying new vehicles," said Dr. Walter McManus, executive
director of global forecasting at J.D. Power and Associates. "The summer is usually a slow sales period, and automakers have traditionally increased incentives to make room for new models. We expect this could be one of the
top-five highest sales months in history [on a SAAR basis]."
J.D. Power and Associates is holding its 2002 calendar-year forecast at 16.5 million units.
"Through June, sales have averaged a 16.5 million-unit SAAR, which is right on track with our forecast," McManus said. "Without occasional
jolts of extra consumer support, sales would be falling. The key question now is whether consumers expect the periodic jolts and will stay home between the waves of incentives."
J.D. Power and Associates' sales forecasts are derived from a joint effort between its Global Forecasting Department and Power Information
Network (PIN), a division of J.D. Power and Associates that compiles new-vehicle retail transaction data from more than 5,300 participating auto franchises in 25 U.S. markets.
About J.D. Power and Associates
Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services firm operating in key business sectors including market research, forecasting, consulting, training and
customer satisfaction.
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