November U.S. Vehicle Sales Down

November new-vehicle retail sales are expected to decline compared with one year ago, according to J.D. Power and Associates, which gathers real-time transaction data from more than 8,900 new car dealers across the United States.

November new-vehicle retail sales are expected to come in at 547,800 units. This represents a seasonally adjusted selling rate (SAAR) – take a deep breath — of 8.2 million units. Total sales for November are projected to come in at 687,800 units, up 0.4% from November 2008, with fleet volume expected to increase by 3.5% from one year ago. Automakers and dealers continue to be punished by the ongoing Great Recession and a jobless recovery.

The latest prediction confirms the cautious attitude of most industry executives, who while trying to talk the market up, are extremely conservative in their private statements to media, as well as with their production scheduling. As always, follow the actions of corporations not their pronouncements.

Severely depressed sales would normally be good news for consumers, as it would prompt higher incentives, thereby decreasing prices.

However, the drastic cutbacks in production and factory closings that have occurred during the past several years and loss hundreds upon hundreds of thousands of autoworkers’ jobs has changed the old marketing equation. Inventories are now being tightly controlled, and the amount of incentives is decreasing as most makers try to bolster bottom lines by increasing prices.

In an ironic twist, out of work autoworkers are poor prospects for new car sales, in an industry and country that once grew rich by paying workers a living wage so they could buy what they were making. Is anybody in Washington paying attention to this vicious cycle downward?

In November, vehicles in the crossover utility vehicle (CUV) segment are expected to account for 25% of all retail sales — the highest level since the segment emerged in 1995, in what is by now a long established trend. The share of “trucks” within the retail segment mix has increased to 51% in November, up from an 18-month low of 43% in August, despite the recent attention surrounding small cars.

Power is now adjusting its forecast down for 2009 slightly, maintaining total sales at 10.3 million units but decreasing retail sales to 8.5 million units from 8.6 million units. The 2010 forecast remains at 11.5 million units for total sales and 9.5 million units for retail sales, in an industry that was once counting on 17 million units.

“As expected, the recovery has been slow, but is progressing,” said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. “The industry is exhibiting a higher level of discipline, as there is a favorable sales ratio of 2010 models to 2009 models and a diminished risk of excess inventory. As a result, transaction prices are at their highest levels in years, indicating a healthier close for the fourth quarter.”

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