U.S. New Vehicle Sales in June Bolstered by Higher than Predicted Fleet Sales

Several auto industry forecasters are predicting this month’s new vehicle sales to be as much as 17% higher than a year ago. Edumunds.com is predicting U.S. light vehicle sales for the month to reach about 1 million units for a seasonally adjusted annualized rate (SAAR) of 11.2 million units. A number of major automakers are set to release their June sales numbers next Thursday.

According to Wells Fargo Securities, the consensus among analysts they monitor puts June sales at a SAAR of about 11.5 million units compared with a year ago when the June SAAR was at 9.5 million units.

In 2009, U.S. car and light truck sales totaled 10.4 million units and a consensus of forecasters predicted this year’s sales would top out at between 11.5 million and 12 million units.

Edmunds.com predicts June’s sales numbers to be weaker than last month’s as many consumers took advantage of aggressive incentive offers from a number of automakers including Toyota Motor Company. So far this year, retail sales have been lower than expected, while fleet sales have exceeded expectations.

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

J.D. Power & Associates expects the higher than expected fleet sales to offset lower than predicted retail sales for a June total of 971,000 units. At that level, U.S. new light vehicle sales for the month would be up 13% compared with a year ago.

Most analysts say the weak job market and high unemployment rate are discouraging consumers from making big-ticket purchases. However, J.D. Power & Associates’ executive director of global forecasting, Jeff Schuster, sees a disconnect between economic conditions and consumer behavior. In a statement, Schuster said, “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.”

As a result, J.D. Power & Associates has lowered their full-year U.S. retail sales forecast from 9.7 million new car sales to 9.5 million units. The previous forecast for total U.S. light vehicle sales (including fleet sales) remains unchanged at 11.8 million units.

Schuster said, “It’s gut-check time for the automotive industry,” and warned, “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.”

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