The Economy

J.D. Power: U.S. New-Vehicle Sales Bounced Back in June

June 27, 2011

Sales of large pickups and compact cars are driving the auto industry's rebound.

Despite a steady stream of seemingly contradictory signals about the economy, U.S. consumers returned to car dealerships in June.

That's the conclusion of J.D. Power and Associates, which projects that U.S. new-vehicle retail sales for June will come in at 884,800 units, up from 833,847 units in May and up 14% from June 2010.

Total U.S. light-vehicle sales in June are expected to come in at 1.1 million units, which is 8% higher than in June 2010.

The June numbers represent a seasonally adjusted annualized rate (SAAR) of 9.9 million units, according to the Westlake Village, Calif.-based marketing information services firm. The retail-selling rate improves upon May's 9.3-million-unit level.

Sales of large pickups helped drive U.S. new-vehicle sales in June, according to J.D. Power.
"There has been some easing of negative variables in June, as the inventory shortage has not been as severe as expected, and gas prices have dropped noticeably from higher levels in April and May," said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. "Provided that the economy decides to cooperate, the automotive summer slowdown will only be a speed bump, and a return of a measurable recovery pace is still expected in the second half of 2011."

J.D. Power, which gathers real-time transaction data from more than 8,900 retail franchisees throughout the United States, noted that sales of large pickups and compact cars are supporting the overall jump in retail sales.

Large pickups are accounting for 10.6% of retail sales month-to-date -- the highest level since February -- while compact cars comprise 17.6% of retail sales, up from 17.2% in May, according to J.D. Power.

Retail transactions are the most accurate measurement of true underlying consumer demand for new vehicles, according to the firm.

Plenty of Uncertainty Ahead

Even as some of the pressure has lessened, the level of uncertainty in the U.S. market remains high.

J.D. Power has reduced its forecast for 2011 retail sales from 10.6 million units to 10.5 million units, and revised its forecast for total sales from 13 million units to 12.9 million units.

"Conditions for light-vehicle sales are improving, but the automotive market remains fluid and susceptible to a slower economic recovery or external shock," said John Humphrey, senior vice president of automotive operations at J.D. Power. "This risk is driving a more cautious approach to the market outlook for the remainder of 2011 and into 2012."

Through May, light-vehicle production for North America on a year-to-date basis is up 10% from the same period in 2010.

In addition to the recovery of volume with the Japanese brands, the Detroit Three automakers have ratcheted up production, as have the European and Korean brands.

GM, Ford and Chrysler are up 18% year-to-date, compared with 2010, according to J.D. Power. The European manufacturers are up 44%, and the Korean manufacturers are up 56% for the same period.

About the Author

Josh Cable | Former Senior Editor

Former Senior Editor Josh Cable covered innovation issues -- including trends and best practices in R&D, process improvement and product development. He also reported on the best practices of the most successful companies and executives in the world of transportation manufacturing, which encompasses the aerospace, automotive, rail and shipbuilding sectors.

Josh also led the IndustryWeek Manufacturing Hall of Fame, IW’s annual tribute to the most influential executives and thought leaders in U.S. manufacturing history.

Before joining IndustryWeek, Josh was the editor-in-chief of Penton Media’s Government Product News and Government Procurement. He also was an award-winning beat reporter for several small newspapers in Northeast Ohio.

Josh received his BFA in creative writing from Bowling Green University, and continued his professional development through course-work at Ohio University and Cuyahoga Community College.

A lifelong resident of the Buckeye State, Josh currently lives in the Tremont neighborhood of Cleveland. When the weather cooperates, you’ll find him riding his bike to work, exercising his green thumb in the backyard or playing ultimate Frisbee.