Demand is strong for some models, like the 2010 Ford Fusion -- but weak overall.
After being hammered for most of the year, the auto industry got some reasonable good news with the December 2009 sales numbers, an upturn sizable enough to make “cautiously optimistic” the operating mantra among the industry leaders who assembled at this month’s North American International Auto Show.
But some might soon reassess even that guardedly upbeat attitude, at least if January’s preliminary sales numbers are any indication of what’s to come. Using real-time dealer transaction data, J.D. Power and Associates is forecasting the current month will see another decline in car sales.
Retail volumes are anticipated to reach just 500,900, according to Power, which would translate into a seasonally adjusted annual rate, or SAAR, of just 7.9 million units. That’s not only a letdown from the unexpected December sales thaw, which brought a SAAR of 8.9 million, but also a huge decline from January of last year, when the SAAR stood at 8.8 million.
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| U.S. Sales and SAAR – January 2010 | |||
| January 2010 1 | December 2009 | January 2009 | |
| New-vehicle retail | 500,900 (-4% Jan. 2009) | 817,426 | 562,619 |
| Total vehicle sales | 659,000 (+9% Jan. 2009) | 1,027,837 | 655,302 |
| Retail SAAR | 7.9 million | 8.9 million | 8.8 million |
| Total SAAR | 10.1 million | 11.2 million | 9.6 million |
| 1 Figures for January 2010 are forecast based on the first 11 selling days of the month. | |||
“January is typically a weak selling month, but this month is particularly impacted by December’s strong close and extra selling weekend,” said Jeff Schuster, Power’s executive director of global forecasting.
But the steady stream of data did reveal at least some glimmer of hope, said Schuster, noting, “the sales pace has been improving as January continues, which is an encouraging sign for the recovering industry.”
The retail numbers tell only part of the story, of course, as manufacturers also get a sizable share of their business from corporate and daily rental fleets. But the industry has been on an alleged push to reduce dependence on fleet business, especially sales to the low-profit daily rent-a-car companies.
Nonetheless, Power data show that makers are increasing fleet business, at least for now, and when you add them, the overall numbers for January will actually show a 9% year-over-year increase, to 659,000 vehicles.
All in, this month’s SAAR should hit 10.1 million, compared with 9.6 million in January 2009 – but still an anemic figure compared to December’s 11.2 million.
Power is still holding its forecast for 2010 as a whole to 11.5 million, though some in the industry have been paring back to figures closer to a round 11 million. Power justifies its estimate by noting increased leasing, freer credit and improved economic conditions.
The California-based research firm also notes that makers are doing a better job keeping production in line with demand than in the past. Currently, the industry has a 53-day supply of cars, trucks and crossovers sitting on dealer lots. That compares with 94 days a year ago – and the 60 to 70-day average long considered healthy.
Several manufacturers, including General Motors and Ford have been suggesting they will need to increase production on some of their more popular models, such as the Chevrolet Malibu, which are actually in short supply. Power forecasts first-quarter 2010 production, overall, will surge 70%, to 2.8 million vehicles, compared with just 1.7 million last year, when the recession-wracked industry was racing to cut back as quickly as possible.