"Summer Clearance" Sales May Draw Auto Buyers, but the Deals Won't Be Great
Despite a ton of auto advertising lately for "summer clearance" sales, the car companies are sticking to a strategy of keeping a lid on incentives, relatively speaking.
The net result is that analysts expect the best U.S. auto sales in July since last year's Cash for Clunkers promotion. That's good news for auto industry profits, but not-so-good news for consumers, because the deals aren't as generous as in pre-recession days.
Edmunds.com analyst Jessica Caldwell said consumers have been absolutely correct in learning to expect the best deals of the year at the end of the traditional model year, in the summer and early fall. That makes July and August peak auto sales months, a pattern that will probably continue, even though there's less substance behind all the ads.
"Consumers see a lot of deals, or at least what they perceive as a lot of deals, and they tend to come into the marketplace, more so when times are tough. Essentially they are waiting for that 'deal' message," she said.
That message is coming through loud and clear, with wall-to-wall promotions like the 2010 Nissan Bottom Line Model Year-End Sales Event, the Toyota National Clearance Event, GM Summer Savings, the Ram Truck Tent Event and many more.
Caldwell said last week Edmunds.com expects a Seasonally Adjusted Annual Rate in July of "close to 12 million." Separately, J.D. Power and Associates said it expects a July SAAR of 12.2 million.
According to Edmunds.com, the auto industry average incentive in June was $2,661, down from $2,697 in May, and down from $2,857 in June 2009. Shopping is up in July even though the deals aren't necessarily much better, according to the consumer research and shopping web site.
Jeff Schuster, executive director of global forecasting for J.D. Power, said the firm expects light-vehicle sales of about 11.7 million for 2010, up from about 10.4 million in 2009. The 2010 forecast assumes that the car companies won't suddenly pull out all the stops on incentives. They are less motivated to do that because inventories are under control, Schuster said.
"The discipline seems to be there," he said.
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Photo: Nissan