• by Karl Greenberg , May 20, 2010

Memorial Day is a strong auto-sales holiday and it will be much needed after a slow start this month. 

J.D. Power and Associates, which gathers real-time transaction data from some 8,900 U.S. retail franchisees through its Power Information Network, is reporting that automakers will sell 874,000 units this month -- which, if the whole year followed suit, would be only 9.2 million units. April's selling rate was 9.6 million units.

That 9.2 million number will be pushed up to 11.3 million units by sales to fleet operations such as rental companies, per J.D. Power, which says total light-vehicle sales for May are projected to come in at 1.1 million units, an increase of 17% over one year ago.

The firm says that the number this month will be better than during the same month last year, improving by about 11% versus May 2009. One of the reasons that sales are slower this month is that incentives have not increased but are holding at $2,800, on average, per vehicle across the industry, it says.

Jeff Schuster, executive director of global forecasting at J.D. Power and Associates, said that will change next week with the holiday. "With the unofficial start to summer approaching, consumers are more inclined to consider purchasing a new vehicle, and it's likely that Memorial Day sales incentives will generate an even stronger close for May," he said.

Because of strong first-quarter GDP growth and lots of new auto products, J.D. Power is increasing its sales forecast slightly to 11.8 million units (from 11.7 million units) for total sales and to 9.7 million units (from 9.6 million units) for retail sales.

Another major improvement is coming from automakers getting a handle on inventory, too much of which has deleterious effects on brand and product value. J.D. Power predicts that automakers this year will end the year with a healthy 60-day supply versus 118 days in January 2009.