June sales expected to beat 2009, but fall below May’s results

DETROIT -- New-vehicle sales are expected to increase in June over a year ago -- when demand was unusually weak -- with the rise expected to be as much as 17 percent, based on several forecasts released in recent days.

The consumer Web site Edmunds.com expects U.S. light-vehicle sales to reach almost a million units, representing a seasonally adjusted annualized selling rate of 11.2 million.

Major automakers are scheduled to report June sales on Thursday.

The consensus among analysts tracked by Wells Fargo Securities is for June sales to come in at a SAAR of 11.5 million.

A year ago, the June SAAR was 9.5 million, when the U.S. market was in the worst slump in at least three decades.

U.S. light-vehicle sales totaled 10.4 million cars and trucks in 2009, and the consensus forecast for 2010 sales is 11.5 million to 12 million.

Fleet sales better

But June sales are expected to be weaker than May. Edmunds.com says many buyers who normally would have waited to buy a vehicle this summer decided to buy earlier because of aggressive incentives from Toyota Motor Corp. and other automakers in recent months.

For the year to date, fleet sales have been higher than expected, with retail demand weaker than forecasts.

“Retail sales need to ramp up in the second half to boost full-year sales in the 11.5 million-to-12 million range,” Wells Fargo analyst Richard Kwas said in a research report released yesterday.

High unemployment and weak job and income growth are discouraging many U.S. households from buying big-ticket items.

J.D. Power and Associates expects June sales to reach 971,000 vehicles, up 13 percent from June 2009, with fleet sales offsetting weakness in the retail market.

Retail sales weak

"With the improving economic environment, retail sales should be stronger than they currently are, but June marks the second consecutive month with a selling rate below 9 million units," Jeff Schuster, executive director of global forecasting at J.D. Power and Associates, said in statement. "In spite of the more favorable conditions, it appears that consumers remain skittish and have yet to respond by buying vehicles at expected levels."

Because of continued weakness in the retail market, J.D. Power and Associates lowered its retail sales forecast slightly to 9.5 million from 9.7 million for all of 2010. The market research firm’s forecast for total light-vehicle sales for 2010 remains at 11.8 million.

"With the recovery not progressing as expected, it's gut-check time for the automotive industry," said Schuster. "The industry's discipline will be put to the test even more in the coming months if a more pronounced recovery doesn't get under way."

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100625/RETAIL01/100629901/1448#ixzz0s0O6PIG3