Light-vehicle sales stabilizing

Oct. 24, 2011
Though economic uncertainty remains high, continued month-over-month strength in new light-vehicle sales suggests the light vehicle market is “stabilizing” at a healthy level, according to data tracked by global research firm J.D. Power and Associates

Though economic uncertainty remains high, continued month-over-month strength in new light-vehicle sales suggests the light vehicle market is “stabilizing” at a healthy level, according to data tracked by global research firm J.D. Power and Associates.

“After a solid September selling rate, there were questions as to whether the strength would continue into October, given continued concerns with the economy,” said John Humphrey, J.D. Power senior vp-global automotive operations. "However, consumers are again returning to dealerships, keeping the [new light vehicle] sales pace more consistent with the strength seen at the beginning of the year.”

October new-vehicle retail sales are projected to come in at 828,300 units, representing a seasonally adjusted annualized rate (SAAR) of 10.5 million units, he noted.

The year-over-year increase in the selling rate is expected to reach 11% – the second double-digit growth rate in a row, after four months of single-digit growth, Humphrey said.

He added that retail transactions are the most accurate measurement of true underlying consumer demand for new vehicles.

Total light-vehicle sales in October are expected to come in at over 1.01 million – 11% higher than in October 2010 – while fleet sales are also expected to increase 11% compared to October last year, accounting for an estimated 19% of total sales.

As a result of strong sales demand, North American light-vehicle production through the first three quarters of 2011 is up nearly 9% over the same period in 2010.

The “Detroit Three” OEMs – Ford Motor Co., Chrysler LLC, and General Motors – have all increased production by 14% year-to-date, while the European manufacturers have increased 41%, helped by BMW's expansion in South Carolina.

Given the continued strength in October, J.D. Power is maintaining its forecast for 2011 of 12.6-million units for total light-vehicle sales and 10.2-million units for retail light-vehicle sales. The firm’s North American production outlook also remains on track for 12.9 million units, an increase of nearly 9% from 2010.

However, J. D. Power stressed that as the level of economic uncertainty remains high, it’s decreasing its 2012 forecast from 14.1 million units down to 13.8 million units for total light-vehicle sales, and from 11.5 million units down to 11.2 million units for retail light-vehicle sales.

“The risk of a double-dip recession has increased to nearly 40%, driving the reduction in the forecast for 2012,” explained Jeff Schuster, J. D. Power executive director of global forecasting. “While there have been recent positive signs in the economy and we expect another recession will not materialize, the recovery pace for 2012 is taking another hit, although a complete halt in growth is unlikely.”

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