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Despite Mixed Economic Signals, Auto Sales on Pace to Reach 14.5M Units

Despite Mixed Economic Signals, Auto Sales on Pace to Reach 14.5M Units

By Jeff Youngs, July 26, 2012
J.D. Power and Associates and LMC Automotive* today announced that July light-vehicle sales are on pace to reach 1,168,000 units, a 20-percent increase from July 2011. This represents the second strongest year-over-year growth rate of the past 12 months.

Despite varied economic signals in the labor market, pent-up demand for new vehicles and the increasing popularity of 72-month loan terms appear to be fueling continued growth in auto sales, particularly in the small and mid car segments. John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates, said, "Long-term financing is a key driver in sales growth. Loan terms and credit availability are bringing consumers who have been shut out since the recession began in 2008 back into the market."

Sustained consumer demand reflected in July's strong year-over-year sales growth gives LMC Automotive confidence to maintain its 2012 annual light-vehicle sales forecast of 14.5 million units. However, Jeff Schuster, senior vice president of forecasting at LMC Automotive, said, "The automotive industry is closely watching the sales performance over the next two months as the industry wrestles with a mixed bag of economic signals. Given the economic slowdown and the increasing likelihood that we see a second half boost in auto sales, there is approximately 150,000 units of risk to the 2012 forecast."

Although general economic indicators present some risk to LMC Automotive's forecast, Schuster noted that construction, a leading indicator of economic recovery, is "gaining traction" and that there has been a 26% year-to-date increase in the U.S. auto manufacturing sector. Schuster said, "Increases in North American production volume remain a bright spot in the automotive industry this year, as volume teeters at 15 million units and is at the highest level since 2007."

*J.D. Power and Associates and LMC Automotive have a strategic alliance to share data and produce sales forecasts based on J.D. Power's real-time transaction data collected by PIN, with analysis and intelligence from LMC Automotive.

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