New Vehicle Sales Up During First Half of Year

According to a new study by J.D. Power & Associates, retail sales of new vehicles rose during the first half of the year despite the U.S. economy’s lackluster performance.

The report projects that retail new vehicle sales for this month will reach 884,000 for a seasonally adjusted annualized rate of 9.9 million and a year-to-year increase of 18 percent over last year. The June projection also represents a 6 percent month-to-month increase in new vehicle sales.

Despite high fuel prices at the pumps, large pickup sales numbers remain strong, accounting for 10.6 percent of all month-to-date new vehicle retail sales.

New compact vehicle sales accounted for 17.6 percent of retail sales month-to-date, up 4/10 of a percent from May.

Fleet sales for June are expected to fall by around 9 percent year-to-year to about 221,600 units due to inventory shortages.

Through the first five months of this year North American light vehicle production rose by 10 percent compared with the same period last year. Through May, production volume reached 5.3 million units, up from 4.8 million units produced during the same five month period in 2010.

While overall production has increased, U.S. production of Japanese vehicles has fallen by nearly 13 percent, in large part due to parts shortages caused by the Japan earthquake and tsunami last March.

Power predicts that production of Japanese light vehicles will return to pre-earthquake levels this summer.

Production by Detroit’s Big Three automakers has increased 18 percent year-to-date, compared with last year. European automakers have ramped up production by 44 percent and Korean automakers increased production by 56 percent during the first five months of this year.

At the beginning of this month, inventory levels fell to a 49 days’ supply, down from 54 days’ supply in May. Power predicts that inventories of some smaller models as well as some Japanese vehicles will remain in short supply over the coming months. Overall inventories, however, are expected to improve soon.

Power is predicting that U.S. production will reach 12.9 million units this year, down from its earlier forecast of 13 million units. It also reduced its yearly retail sales forecast from 10.6 million units, to 10.5 million units as consumers remain cautious about the economy.

According to Power’s president of automotive operations John Humphrey, “Conditions for light-vehicle sales are improving, but the automotive market remains fluid and susceptible to a slower economic recovery or external shock.  This risk is driving a more cautious approach to the market outlook for the remainder of 2011 and into 2012.”

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