What Impact Will August Turmoil Have On Car Sales?

NOTE: WWJ AutoBeat Reporter Jeff Gilbert will be following the car sales numbers as they come out. You can view his Twitter feed (@jefferygilbert) here.

INTERVIEW: Edmunds.com Senior Analyst Jessica Caldwell talks about August car sales expectations.

DETROIT (WWJ/AP) -- Car sales figures that come out later today for August are expected to continue the disappointing trend we saw earlier in the summer. Analysts are expecting to see sales up about four per cent over last year. That's an improvement, but not as much as you'd normally see at this point in a recovery.

"I'd say August could be characterized as relatively flat from July," said Jessica Caldwell, senior analyst at Edmunds.com. "That isn't a bad thing, if you look at all of the economic turmoil."

That turmoil included a roller-coaster ride on the stock market, volatile gasoline prices, and the specter of a possible double-dip recession. Analysts are expecting the seasonally adjusted sales rate to be in the 12 million range. That would be comparable to the rest of the summer, but lower than the rate the industry had been seeing in the spring.

The month ended with a hurricane. That likely kept many buyers out of east coast dealerships in the month's final week.

"With the economic woes, summer vacations and Hurricane Irene taking center stage, August may be a lost month for vehicle sales, but the slight increase in the retail selling rate from last month is still a step in the right direction," said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates, in a statement. "Marketing and incentive focus has already shifted to September with the upcoming Labor Day weekend, so with improved inventory, the sales pace could show marked improvement next month."

While Schuster has backed off slightly on his sales forecast for the year, analysts have expected September to be the year sales pick up. Japanese brands are getting more products into their showrooms. Caldwell, from Edmunds.com says that should bring back the buyers who were sitting out over the summer.

"I think there's still a lot of pent up demand out there in the marketplace, with regards to the Japanese automakers," she said. "We're seeing favorable gas prices. That's definitely going to help. Usually, at the end of the year we see a strong push in advertising from the auto makers, and that usually spurs showroom traffic."

For now, the industry hopes that a return to more normal markets this fall will mean more buyers.
"September will be the acid test of underlying demand for the rest of the year," Jeffries auto analyst Peter Nesvold said Tuesday in a note to investors.

But the industry remains cautious. The unemployment rate is stuck at 9 percent, food and clothing costs are going up and consumer confidence dropped to its lowest level in more than two years in August.

"If there's one thing you need confidence to buy, it's a car," said Efraim Levy, an equity analyst with Standard and Poor's. Levy recently dropped his full-year U.S. sales forecast from 13 million cars and trucks to 12.9 million, citing low confidence and the fluctuations in the stock market.

Many dealers are uncertain, too. Brattleboro Subaru in Vermont was undamaged by the storm and open for business this week. But sales manager Luke Higley expects sales will be slow for a while because of severe flooding.

"We're going to have to wait and see," he said.

The Associated Press contributed to this story.