J.D. Power: Awful Auto Sales Stabilizing

car sales/down arrowSo far in April, spring doesn't seem to have brought any bloom to car sales, a circumstance that is driving General Motors to idle its factories for nine weeks. According to marketing powerhouse J.D. Power & Associates, new-vehicle sales at dealerships fell 33% in the first half of this month versus the same period last year. The firm is guardedly optimistic, though.

The firm projects that new-vehicle retail sales for the month will be 668,000 units, which works out to sales of 7.8 million units for the whole year if April sales are extrapolated to other months. While that is a 33% drop from estimates for the full year based on last April, it is in line with how the market has done so far this year. April, in other words, does not represent a markedly worse performance than January through March, dreadful as those were.



"Industry sales are starting to show signs of stability -- albeit at levels near 30-year lows -- as the retail sales [seasonal adjusted annual rate] has been at or near the 7.8 million-unit level for the past three months," said Gary Dilts, SVP, global automotive operations at J.D. Power and Associates. He predicts that sales will increase in the second half, in line with the firm's own 8.5 million-unit retail and 10.4 million-unit total light-vehicle forecast for the year.

And the firm sees recovery over the next five years. J.D. Power and Associates estimates that demand will grow by 20 million units through 2014, driven by an increase in the number of households, consumers returning to the market with more vehicle equity in an improved credit environment, and an improved economy that will yield enhanced consumer options in the automotive market driven by new-vehicle launches.

The firm sees slow improvement this year, and more steady growth starting next year. Automakers like Ford, Hyundai and General Motors have been attempting to respond not merely by increasing incentives, but by trying to offer means of giving consumers security blankets in the form of payment insurance. Ford is backing the 2010 Fusion, among other vehicles, with the Advantage plan that offers pre-approval through Ford Credit and payment insurance. General Motor's "Total Confidence" program offers payment, equity and vehicle protection.

While GM will close 13 North American assembly plants in the second and third quarters, cutting some 190,000 vehicles from North American production, the company says it will maintain launch production schedules for the Camaro, Buick LaCrosse, Chevy Equinox and Cadillac SRX.

"We're taking aggressive steps to accelerate our inventory initiatives that have worked well since the first of the year. While sales have been performing at or close to our plan estimates, and dealer inventories have been reduced accordingly, we want to more closely align inventories with even more conservative market assumptions," said Troy Clarke, GM North America president. "By reducing our inventories even more aggressively we reduce pressure on GM and our dealers, and set ourselves up well for a clean 2010 model year start-up."

J.D. Power's Power Information Network culls data in real time from some 10,000 dealerships in the U.S.

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