Auto Industry Lumbering Toward Turnaround?

car dealershipThe automotive market appears to be lumbering toward something like a turnaround.

Looking at sales so far this month in the U.S., J.D. Power and Associates says the rate of decline in new-vehicle retail sales has slowed this month versus the last 12 months, but what the firm calls "a high level of consumer uncertainty" means that retail sales are still flat. And there will be a delay in market recovery of two to three months beyond the spring selling season.

The data for J.D. Power's prognostication comes from its Power Information Network, which culls real-time retail data from 10,000 auto dealers nationwide.

Banking on what the dealers have seen in the first two selling weeks of May, the firm predicts that new-vehicle retail sales for the month of May will come down at 716,000 units, representing a seasonally adjusted annualized rate (SAAR) of 7.6 million units. If so, May will be down by 36% from one year ago, but up by 9% compared with April 2009, per the company.



Because of that halting recovery, it is downgrading its 2009 forecast by 400,000 units to 10 million, with 8.3 million of that comprised by retail sales at dealerships. Of that 400,000, 230,000 will be fewer retail sales, predicts J.D. Power, and the rest will be fleet.

Gary Dilts, SVP of global automotive operations at the firm, says the first real uptick will be this summer. "While there are some signs of stability in the automotive market, current sales rates indicate that achieving recovery will not be a quick proposition," he said in a release.

Meanwhile, European and Asian automotive markets -- Germany and China -- are seeing some improvement monthly, thanks to programs like scrappage incentives.

By contrast with the U.S., the global outlook has been stable since January, per Jeff Schuster, executive director of global forecasting. "As major international automotive markets continue their recovery, we have increased our outlook for 2009 global light-vehicle sales to 58.6 million units, from 57.5 million units forecasted in March."

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