June Expected To Be Another Difficult Car Sales Month
NOTE: June 2011 car sales figures start coming out around 11 AM. WWJ AutoBeat Reporter Jeff Gilbert will be following the sales, and sending out alerts via Twitter. Jeff's Twitter feed @jefferygilbert can be accessed here.
DETROIT (WWJ) The auto industry is anticipating the second consecutive weak monthly sales report, but it appears to be more a pause in the recovery than an overall trend.
Analysts are expecting an annual sales rate for June just below 12 million units. That would be a slight improvement from May, but still not back to the pace set in the first four months of the year.
Among the factors depressing sales are the lack of availability of some Japanese products and the relatively low level of incentives.
"Sales in June typically face pressure from being between two strong selling holidays—Memorial Day and Independence Day—but incentive levels $500 below the first-quarter average and depleted vehicle inventory have added to the pressure as the month progressed," said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. "However, the fundamentals remain in place for a marked return to the recovery pace set in the first four months of the year."
Executives at the major carmakers see May and June as an interruption of a recovery that will resume as the year goes on.
"I think it's a good bet that the May-June period represents the soft spots in the 2011 calendar year," said Ford sales analysis manager George Pipas. "The second half sales rates will be improved over what we've seen the last two months."
Still, Pipas expects Ford sales to be up year over year, and General Motors has said it expects its Chevrolet brand to post a strong June performance, lead by cars, particularly the Chevy Cruze. That means Chevy cars have outsold its trucks for three months. This is the first time that's happened in twenty years.
Domestic automakers aren't enthusiastic about the month, but are pleased that sales are steady.
"They're decent," said GM North America President Mark Reuss, who sees June as a month of stability.
Analysts say most of the sales drop is among Japanese brands. Domestic brand sales have held steady most of the year.
Another issue is incentives, which have been low the last few months, but are starting to trend up.
"By kicking up their incentive spending, Toyota and Honda are sending a clear message that production levels are starting to return, even if those vehicles haven't yet hit dealer lots," said Jessica Caldwell, director of industry analysis at Edmunds.com.
Many of the incentives from Japanese brands allowed consumers to lock in deals now for vehicles that are delivered in the fall, when inventories return to normal.
While Japanese automakers are increasing incentives, Edmunds.com says South Korean companies are backing off, with American and European automakers raising deals a little bit.
"Despite the increases, overall incentive spending across the automotive industry continued at a very conservative pace in June," said Caldwell. "We haven't seen a run of spending this low in almost a decade."
