Car, truck demand rebounding in June after May dip

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U.S. sales of cars and light trucks are rebounding in June after falling for the first time in nine months in May, analysts said.

June increases projected by three research firms range from 8 percent to 14 percent. May's sales dropped 4 percent from a year earlier as consumers confronted rising gasoline prices, reduced incentives, and vehicle shortages caused by the March earthquake in Japan.

June's seasonally adjusted annual sales rate will be in the 12 million range when automakers' results are announced on July 1, according to the forecasts.

The SAAR had been above that mark for seven straight months before consumers scaled back purchases in May.

"There has been some easing of negative variables in June, as the inventory shortage has not been as severe as expected, and gas prices have dropped noticeably from higher levels in April and May," Jeff Schuster, executive director of global forecasting at J.D. Power and Associates, said in a statement today.

"Provided that the economy decides to cooperate, the automotive summer slowdown will only be a speed bump, and a return of a measurable recovery pace is still expected in the second half of 2011."

Overall, light vehicle demand is forecast to rise 8 percent this month from June 2010 to 1.1 million units, or at an annualized rate of 12 million, J.D. Power said.

Trucks, small cars pace gains

Retail sales of new vehicles are projected to come in at 884,800 units in June, which represents a seasonally adjusted annualized rate of 9.9 million units, J.D. Power said.

That's an improvement from May's 9.3-million-unit rate.

Large pickup and compact car demand are driving the increase in June sales.

J.D. Power said big pickup trucks represent 10.6 percent of retail sales month-to-date — the highest level since February.

Compact cars comprise 17.6 percent of retail sales this month, up from 17.2 percent in May.

May sales dropped to a seasonally adjusted annual rate of 11.78 million units - the lowest level since August 2010 – after topping 13 million units for three straight months.

U.S. light vehicle sales are up 14 percent through May, to 5.28 million units.

May dip

On Thursday, estimated June new light vehicle sales, including fleet, will climb 13.5 percent to 1.12 million units from a year ago.

June retail sales are forecast to rise 2.1 percent from a year earlier, TrueCar said.

"Uncertainty in the economy as well as high gas prices and shortages in small car inventory contributed to the limited gains in sales in June." TrueCar analyst Jesse Toprak said in a statement. "May appeared to be the low point in vehicle sales this year and we don't expect sales to go below 11.9 million SAAR level." estimates June sales of 1.09 million new vehicles, up 11.2 percent.

Low supplies of small, fuel-efficient models and price increases have prompted consumers to delay purchases, Edmunds said.

"As prices and inventory return closer to normal levels by September, many of those lost sales can be made up by the end of this year when consumers return to the market," chief economist Lacey Plache said in a statement.

Lower outlook

While some of the external pressures on new car and truck demand have lessened in recent weeks, some analysts and automakers have grown more cautious about the industry's outlook.

The Federal Reserve, citing slow job growth, fuel prices and the weak housing market, this week lowered its forecast for U.S. economic growth for the remainder of the year.

J.D. Power has reduced its forecast for 2011 retail sales to 10.5 million units from 10.6 million units. And the company's forecast for total sales, including fleets, has been revised to 12.9 million units from 13 million units.

"Conditions for light-vehicle sales are improving, but the automotive market remains fluid and susceptible to a slower economic recovery or external shock," John Humphrey, senior vice president of automotive operations at J.D. Power, said in a statement. "This risk is driving a more cautious approach to the market outlook for the remainder of 2011 and into 2012."
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