Costly gas hits light-duty sales

May 24, 2011
Retail sales of new light-duty vehicles – from cars to pickup trucks – are weakening mainly due to high gasoline prices, according to recent research by J.D. Power and Associates

Retail sales of new light-duty vehicles – from cars to pickup trucks – are weakening mainly due to high gasoline prices, according to recent research by J.D. Power and Associates.

The firm predicts that retail sales of new light-duty vehicles should total 858,400 units, which represents a seasonally adjusted annualized rate (SAAR) of 9.6 million units. Although the light-duty retail selling pace is nearly 1 million units higher than it was in May 2010, it’s dropped sharply from the 2011 year-to-date average of 10.7 million units, noted J.D. Power.

“Retail sales in May are being hit by several negative variables—specifically, high gas prices, lower incentive levels and some inventory shortages,” said Jeff Schuster, executive director of global forecasting for J.D. Power. “As a result, the industry will likely be dealing with a lower sales pace at least through the summer selling season, putting pressure on the 2011 outlook.”

He noted that total light-vehicle sales – including new, used, and fleet sales – this May are expected to come in at 1.073 million units, which is 6% higher than in May 2010. Fleet sales are expected to be lower in May due to the inventory shortages and are projected to finish the month at 214,600 units, down 8% from May 2010.

Shuster said the outlook for light vehicle sales in 2011 is beginning to bear the risk of the selling pace slowdown that is projected to occur during the next several months and, as a result, J.D. Power is lowering its forecast for retail sales of new light-duty vehicles slightly to 10.6 million units from 10.7 million units. However, the firm’s forecast for total sales remains at 13 million units.

J.D. Power added that year-to-date North American production is up 12% from the same timeframe in 2010, which bodes well for trucking companies that haul freight for automotive manufacturing plants.

In 2011, 4.3 million light vehicles were produced during the first four months of the year, compared with 3.8 million units built during the same period in 2010. The earthquake, tsunami and resulting nuclear power plant crisis in Japan have caused many production disruptions thus far due to parts shortages for Japanese manufacturers.

This shortage is expected to continue throughout the second quarter of 2011, with more than 400,000 units of production expected to be lost in the short term, J.D. Power said.

The firm noted that its North American production forecast has been reduced slightly for 2011, with volume now rounding down to 12.8 million units from 12.9 million units. As the parts situation stabilizes and unaffected manufacturers increase production, most of the lost volume is expected to be recouped during the second half of 2011 at the top line level, J.D. Power said.

Sponsored Recommendations

Way Beyond Weight: 5 Ways Truck Weights Affect Fleet Operations

Truck weights affect everything from highway safety and operational costs to back-office efficiency. Here’s how.

Heavy-Duty Maintenance Checklist

A maintenance checklist can help ensure you hit everything necessary during an inspection. Check out our free downloadable checklist to help streamline your repairs.

Five Ways a Little Data Can Save Your Company Millions

While most trucking and logistics companies rely on cellular to keep their work fleet connected, satellite has the ability to connect anywhere and through small data transmission...

Fleet Case Study: 15% YOY Growth for ITDS

Learn how this small trucking company scaled significantly and maintained outstanding customer service without adding additional people. Sylectus TMS can automate operations and...

Voice your opinion!

To join the conversation, and become an exclusive member of FleetOwner, create an account today!