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August New-Vehicle Retail Sales Show Strength Amid Weak Economic Growth and Consumer Uncertainty

August New-Vehicle Retail Sales Show Strength Amid Weak Economic Growth and Consumer Uncertainty

By Jeff Youngs, August 24, 2012
The August new-vehicle retail-selling rate is expected to be the highest monthly rate since early 2008, according to a monthly sales forecast developed by J.D. Power and Associates and LMC Automotive. The sales rate reflects a continued consumer need to replace aging vehicles, combined with increased availability of credit. Both companies, however, remain cautious about future sales trends, citing "weak economic growth and consumer uncertainty."

August new-vehicle retail sales are forecast to reach 1,066,200 vehicles, continuing a 4-month trend of double-digit year-over-year growth. Sales in August reached their highest monthly level since 2008 despite the fact that available incentives were, on average, $106 less per vehicle during the month, and available inventory shrank, compared with July.

John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates, said, "To date, automakers have been diligent in better balancing production with demand, which has been critical to the improved financial performance for many brands. Going forward, this discipline will be tested as demand looks to cool somewhat through the balance of the year."

Despite strong August sales, data from LMC Automotive suggests reason for caution with regard to sales projections for the remainder of 2012 and into 2013. In addition to weak economic growth in the United States, the European economic crisis could negatively impact economic factors on this side of the Atlantic.

"The strength in August light-vehicle sales takes some of the pressure off expectations for the balance of the year, but a high level of risk lingers," said Jeff Schuster, senior vice president of forecasting at LMC Automotive. "Given that inventory has normalized and growth in demand is expected to slow, LMC Automotive is holding the forecast for 2012 at 14.9 million units for the year."

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