Recovery Continues With Stronger January Likely

The upward trend of auto sales that began last fall is continuing this month, if predictions hold water. J.D. Power & Associates sees January new-vehicle retail sales at 632,100 units, which would be a seasonally adjusted annual rate of 10 million units, nearly 2 million units higher than January last year.

The firm predicts January retail volume will be up 23% from one year ago. Retail excludes sales of new vehicles to fleet operations such as rental companies, which give a rosier picture of the market than a pure consumer demand-driven analysis.

While January's numbers are down from December, that is par for the course and reflects the yearly cycle, not vicissitudes of the larger auto market, notes Jeff Schuster, who runs global forecasting at the firm.

"For three of the past four months, sales have been above a 10-million-unit SAAR, and buyers have returned to showrooms without the crutch of high incentives. This signals stability and strength of natural demand," he said in a statement from the Thousand Oaks, Calif.-based company.



Because of the momentum of economic recovery, J.D. Power is upping its retail sales forecast for 2011 to 10.5 million units from 10.4 million units. It is therefore increasing its total-sales prediction to about 13 from 12.8 million units.

"Optimism is increasing for the auto industry following a stronger outlook for the economy," said Schuster, who added that gross domestic product is likely to be in the 3-3.2% range this year. "As the macro drivers continue to improve and credit availability increases," he said, things are looking good.

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