New vehicle sales through the first 17 selling days of June are down 9% from May of 2008, according to J.D. Power and Associates, which gathers transaction data from more than 10,000 dealerships across the United States.
Retail sales for the month of June are predicted to come in at 789,400 units, which represents a seasonally adjusted annualized rate (SAAR) of 9.2 million units. Retail sales for June have improved from May, but fleet sales have declined markedly. As a result, the June SAAR for total vehicle sales remains stuck at depressed levels not seen for 30 years or more.
This is obvious when you look at the total SAAR number, which has declined 3.5 million vehicles from a year ago period, and indicates just how much trouble the industry is in, as the ongoing effects of the Great Recession show no signs of abating.
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U.S. New Vehicle Sales and SAAR Comparisons |
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| June 2009 (1) | May 2009 | June 2008 | |
| Retail Sales | 789,400 (-19% June ’08) | 788,547 | 931,491 |
| Total Sales | 914,400 (-26% June ’08) | 924,064 | 1,186,619 |
| Retail SAAR | 9.2 million | 8.1 million | 10.1 million |
| Total SAAR | 10.3 million (-24% June ’08) | 9.8 million | 13.6 million |
| (1) Figures for June ’09 forecast from the first 17 selling days. J.D. Power and Associates | |||
“Consumer confidence is improving, and market uncertainty is starting to decline, which has made consumers more willing to take advantage of deals on new vehicles,” said Gary Dilts, senior vice president of Power’s global automotive operations. “In addition, sales incentives –including those from Chrysler dealers facing closure — have helped contribute to the upswing.”
Power is holding its forecasts for 2009 steady at 8.3 million for retail sales and 10.0 million units for total sales.
A more favorable environment in the second half of 2009 could result due to continued sales momentum, improved economic fundamentals and a stronger than expected response to the Cash for Clunkers program.
While the program theoretically could increase retail sales by as much as 500,000 units on an annualized basis, Power thinks that actual sales increases would be considerably lower, due to funding limitations and the duration of the program. The requirements of the three-to-four-month long Cash for Clunkers program — which are based on fuel economy improvements and vehicle age balanced with trade-in value — are “restrictive and potentially confusing” to consumers, thus limiting its potential.
Recovery in the automotive market could also be hampered by instability and insolvency among vehicle suppliers. Vehicle production is forecast to be as low as 8 million units for 2009. Levels this low have not been seen since the 1980s. For many suppliers, viability is unsustainable at these levels. With several tier-one suppliers in or approaching bankruptcy, failure of these large suppliers would create a ripple effect among smaller suppliers. In turn, this could cripple vehicle manufacturers’ ability to replenish vehicle inventory and hamper prospects for any near-term recovery.