U.S. Auto Sales in June Show Demand is Still Awfully Thin

My squinting muscles are sore from trying to see the widely reported good news in June U.S. auto sales numbers.

Once again, the seasonally adjusted annual rate of auto sales fell short of 10 million. That anemic number has become the new benchmark for the minimum demand needed to keep Chrysler and General Motors alive, not to mention the rest of the U.S. industry.

The June SAAR was only 9.69 million, according to AutoData Corp. That means that at the June sales pace, the U.S. industry would probably sell that many cars and trucks in a year. The SAAR is an estimate based on sales history and considerable seasonal variation in auto sales.

Unit sales were 849,857 for the month, down 27.7 percent from the year-ago month, AutoData said. In the first half, U.S. auto sales were 4.8 million, down 35.1 percent.

Edmunds.com had predicted the SAAR would break 10 million in June for the first time this year, but sales were worse than expected for General Motors and Chrysler. Ford did better than Chrysler and GM and a little better than Edmunds.com expected. Ford's relative success got a lot of the headlines this time around.

But if you draw a graph of the SAAR, the U.S. auto industry is bumping along what industry analysts hope is the bottom of the current trough. Year in and year out, the U.S. SAAR roller-coaster usually bottoms out early in the year, then peaks in the fall, as the car companies roll out new models and cut prices on older models.

First, there's usually a bit of a spring selling season, as the weather improves and people start visiting showrooms. After the fall peak, there's also usually a seasonal rise in December, especially for luxury brands. The December mini-peak usually pulls forward some demand. That contributes to the trough in January and February. Lather, rinse, repeat.

But not this year. This year's SAAR has stayed in a range between 9 million and 10 million, without much of a January-February trough, nor much of a spring selling season, either. It's pretty bad when a pitiful 10 million SAAR has become the target, and demand can't seem to reach even that level.

Ford may see a silver lining in the black clouds, but the clouds are still awfully black.