Early August Car Sales Show Slow Growth
Car sales in the first two weeks of August are showing growth, but analysts say that growth is slower than many were expecting to see. So, analysts at J.D. Power and Associates are lowering their sales forecasts for the rest of the year.
"If we look at where we are now, compared to where we expected to be at this point, I think we can say things are slower than expected," said J.D. Power's director of global forecasting Jeff Schuster.
Estimates released by J.D. Power on Thursday show sales slowing slightly from July to August. Sales are expected to be off by double digit levels from August of last year, which was boosted by the federal "Cash for Clunkers" program.
"When we did pull the estimate for what we think that impact had on August of last year, which would equate for about 400,00 units, it actually really showed that this August, we're really still in year over year growth," said Schuster.
J.D. Power expecting the august sales rate to be slightly below July's seasonally adjusted annual rate of 9.2 million units.
There are a number of positives. Schuster says production is up 67 per cent over last year, and vehicle inventories remain "disciplined" at 52 days, three days fewer than the end of June. Incentive levels are down 8 per cent.
"The sales that are actually happening are much more profitable."
Schuster says auto companies appear to have adapted to the lower sales rate, and are in no hurry to boost sales, if it cuts into profits. Both Ford and General Motors are making money, and Chrysler has neared the break-even point.
J.D. Power has also adjusted it's 2011 sales projection downward slightly to 13.2 million units. The company says that still indicates an economic recovery, just one that's going frustratingly slow.
"Things have not quite met expectations," says Schuster. "Most of that is due to the economy that tends to be sputtering. I think, we're expecting more of that through the rest of this year."
