July Sales: Best Month Since Cash-For-Clunkers
By Bill Visnic July 30, 2010The auto industry is swimming against poor economic tides and will end up with a healthy July sales rate that is the best since the halcyon days of last summer's Cash-For-Clunkers program. Analysts at Edmunds.com project July's Seasonally Adjusted Annualized Rate (SAAR) to be 11.8 million.
July sales are expected to total about 1,064,000 units - an 8.4-percent jump compared with July of last year and an 8.9-percent improvement over June's troubling 983,000 sales that translated to an 11.1-million SAAR.
Equally important is a projected improvement in retail sales. A large portion of the industry's aggregate volume gains so far this year have been driven by outsized sales to fleet customers, not individual households.
"July sales numbers should be the highest we've seen since last August's 'Cash for Clunkers' frenzy," reported Edmunds.com Senior Analyst Ray Zhou. "Retail demand for new cars this month has been the strongest of the year, even more than in March when Toyota launched an aggressive incentive campaign and other automakers followed suit."
Gains Are Gains
Although many in the auto industry had hoped the sector's (and the nation's) recovery would be more pronounced by this point, July's projected sales rate represents a reversal of June's month-over-month decline and is a solid 4.4-percent gain when adjusted for the one extra selling day compared with July last year.
And domestic automakers continue to chalk up gains, particularly when compared with some Japanese counterparts. Adjusted for the one extra selling day compared with July, 2009, Chrysler Group LLC, Ford Motor Co. and General Motors Co. all are projected to have sales increases, while sales at Toyota Motor Corp. and Honda Motor Co. Ltd. are expected to decline - in Toyota's case, by a substantial margin.
The following sales figures for the three major domestic and three largest import automakers are projected on total unadjusted for the extra sales day this month when compared to July, 2009:
> Edmunds.com predicts Chrysler will sell about 91,400 units in July, up 3.9 percent compared to July last year - but down 0.9 percent from June,2010. This would result in a new-car market share of 8.6 percent for Chrysler in July, down from 9 percent in July, 2009 and down from 9.4 percent in June this year.
> Edmunds.com predicts Ford will sell 180,400 units in July, up 13.2 percent compared to July, 2009 and up 5.7 percent from last month. This would result in a new car market share of 17 percent in July for Ford, up from 16.2 percent in July, 2009 but down from 17.5 percent in June, 2010.
> Edmunds.com projects GM will sell 206,400 units this month, up 9.9 percent compared to July, 2009 and up 5.9 percent from last month. GM's market share is expected to be 19.4 percent in July, up from 19.1 percent last July, but down from 19.9 percent last month.
> Edmunds.com predicts Honda will sell 118,900 units in July, up 3.7 percent from July, 2009 and up 11.5 percent from last month. Honda's market share is expected to be 11.2 percent in July, down from 11.7 percent in July, 2009 but up from 10.9 percent last month.
> Edmunds.com projects Nissan will sell 86,500 units in July, up 21.8 percent from July, 2009 and up 34 percent from June. Nissan's market share is expected to be 8.1 percent in July, up from 7.2 percent last July and up from 6.6 percent compared with last month.
> Edmunds.com predicts Toyota will sell 166,100 units in July 2010, down 5 percent from July, 2009 but up 18.1 percent compared with last month. Toyota's market share is expected to be 15.6 percent in July, down from 17.8 percent last July, but up from 14.4 percent in June of this year.
Real Sales Versus Perception
With widespread 0-percent financing events and the aura of summertime selldowns prevailing, July sales should generate a healthier retail share and are evidence that more consumers are hitting the showrooms - regardless of whether deals actually are all that attractive.
"When perception and reality are in conflict, perception typically rules," commented Edmunds.com CEO Jeremy Anwyl. "We saw the same unwarranted reaction to last year's automaker bankruptcies; people perceived that the circumstances would deliver a great deal on a new car, but a bit of pricing research would have proven that theory false and saved them some real money."
Automakers so far seem to be able to control the urge to boost profit-killing incentives in order to pump up sales numbers, although buyer reaction in July seems to indicate they believe incentives are deep enough to warrant serious shopping.
"Consumers have been conditioned to think that the summer is a great time to pick up a deal on a new car," said Edmunds.com senior analyst Jessica Caldwell. "The bargain-hunting mentality that reigns in the marketplace today - and automakers' ads promoting the clearance of old inventory - are driving people to dealerships in search of deals which, frankly, aren't all that generous this year."
LEAVE A COMMENT
The economic hype goes on. July 2009 was not a good month. Beating those numbers by a substantial amount is progress but signals nothing as far as the rest of 2010. Actual unemployment remains very high and the economy is still very sick..until there is real job growth sales will not be healthy... except in comparison to a disaster like 2009.
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