Road Is Rocky, But Autos Keep Rolling
September is shaping up to be a repeat of August, at least as far as strong auto sales are concerned. Inexplicably, given the flat economy and the approaching election, consumers are buying. One snapshot by J.D. Power and Associates and LMC Automotive shows that new-vehicle sales seem to be keeping up with the trend of a 12% increase this year versus last.
The monthly sales forecast, which garnered sales volume data from J.D. Power's Power Information Network, predicts that consumers will buy somewhere in the neighborhood of 952,200 new vehicles from dealerships. And if that rate is extrapolated to all 12 months and seasonal variations, sales would be one million units higher than last year, or around 11.8 million units for the year for retail sales alone.
John Humphrey, SVP of global auto operations at J.D. Power, says September is shaping up to be 15% better than September last year. The firm says that most segments of the auto market, except midsize utility and large pickups, will enjoy gains this month. The big gainers are going to be sub-compact, compact and midsize segments, with each heading toward retail sales growth of around 25% versus the month last year.
Meanwhile, fleet sales -- which represent vehicles sold to rental companies and others -- increased only slightly by around 200,400 units, another indication of the strength of retail. The firm says that nowadays only about 17% of total light-vehicle sales are fleet.
LMC Automotive (the now-independent former forecasting division of J.D. Power), predicts that 2012 full-year sales for light vehicles -- both fleet and retail -- will be 14.3 million units. The firm sees 11.6 million in retail volume, an optimistic revision based on stronger retail performance during the past two months. The firm is even more optimistic for 2013, although it's a bit of a Hail Mary toss, given the uncertainties of just about everything right now. The firm predicts that the potential for calamitous events notwithstanding, automakers will sell something like 15 million new cars and trucks in the U.S. next year, with Americans buying around 12.3 million of them at dealerships.
"Consumer willingness or need to overlook the economic uncertainty is the driving force behind the recent strength in light-vehicle sales," speculates Jeff Schuster, SVP of forecasting at LMC Automotive. "During the next few months, car buyers will be processing further economic news, additional details on the European crisis, as well as the forthcoming presidential election, likely creating an environment with higher volatility." That might be an understatement.