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Car-Sales Rebound Seen for June

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Car-Sales Rebound Seen for June

Fewer Jobless Claims, Deep Discounts Spurring Demand; Ford to Raise Its Quarterly Production by 16%

The beleaguered auto industry could see signs of strengthening demand when auto makers report U.S. sales for June on Wednesday, according to auto makers and analysts.

Buoyed by fewer jobless claims and improved consumer confidence, annualized U.S. sales could hit 10 million this month for the first time in 2009, Ford Motor Co. analyst George Pipas said on Monday. The deep discounts that General Motors Corp. and Chrysler Group LLC have offered to boost sales are also likely to bolster June sales.

Those factors suggest "the worst is behind us," Mr. Pipas said. "Even if sales fail to hit the 10 million milestone, we're still not slipping back." A GM spokesman also said an annualized 10 million sales rate is possible for June.

J.D. Power and Associates predicts annualized June sales of 10.3 million new cars and trucks, up from 9.9 million in May, while Edmunds.com expects the sales rate to top 10 million, though overall sales will still be 25% lower than a year ago.

"Consumer confidence is improving, and market uncertainty is starting to decline, which has made consumers more willing to take advantage of deals on new vehicles," said Gary Dilts, J.D. Power's vice president of global automotive operations in a statement. He said Chrysler incentives also likely drove the increase.

Underscoring its rosier outlook, Ford said it is now planning production for the third quarter that is 5.4% above its most recent quarterly target.

The company said it would build 485,000 new cars and light trucks during the quarter ending Sept. 30, a 16% increase over the 418,000 produced in the year-ago quarter. It is the second time Ford raised its third-quarter output target.

Ford said earlier this month that it would raise production 10%, to produce 150,000 cars and 310,000 trucks during the quarter. Monday's revised target adds another 15,000 cars and 10,000 trucks. It would be the first time in two years that Ford's quarterly output would be increased year-over-year, and comes amid fresh signs that the downturn in U.S. auto sales may be abating.

"We decided last year to break the mold and stop over producing," said Mark Fields, Ford's president of the Americas. "Our inventory is now down and with demand up, driven by our new products, we are in the position to increase production again. There is definitely a cessation in the deterioration of the economy."

Ford's increased output comes as GM and Chrysler are still scrambling to adjust output to lower demand while dealing with bankruptcy-induced reorganizations.

GM remains in bankruptcy protection while Chrysler is working to find a new direction after merging its assets with Italian auto maker Fiat SpA earlier this month.

Chrysler kept all of its U.S. plants idled during the past two months as it restructured. The company resumed production at seven of its U.S. plants on Monday.

Mr. Pipas predicted the industry's seasonally adjusted annualized sales rate, or SAAR, will be about 9.5 million vehicles for the first half of this year. That's a large drop from 2008's sales of about 13 million vehicles and 2007's total of 16 million.

Ford, which unlike GM and Chrysler has not needed bailout loans from the government, will likely report a decline in June sales of less than 20% from a year ago, he said. Most auto makers have suffered year-over-year monthly declines of 30% or higher this year.

June sales also got a boost as hundreds of dealers who are being forced to close their Chrysler franchises sold off their inventory at deep discounts. GM's Pontiac brand, which is being shuttered as part of the auto maker's restructuring, has also slashed prices in recent weeks to clear its stock.

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My local Chevy dealer is starved of product, and they got approved by GM (near perfect customer service scores). They have no Suburbans or Camaros (as expected), 2 weeks supply of Silverados, Tahoes, and Traverses, 1 month of Malibus, less than 2 months of Cobalts as well as HHRs and 1 year+ worth Aveos (they sell less than 1 every 3 months).

I was told the most dealers in the Northwest have run out of GMTs. GMTs are SO hot, they have resorted to trading Camaros for the trucks (bigger profits on trucks).

Having little to nothing to sell doesn't help these numbers any. The Chevy lots all over Portland are looking empty.

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My local Chevy dealer is starved of product, and they got approved by GM (near perfect customer service scores). They have no Suburbans or Camaros (as expected), 2 weeks supply of Silverados, Tahoes, and Traverses, 1 month of Malibus, less than 2 months of Cobalts as well as HHRs and 1 year+ worth Aveos (they sell less than 1 every 3 months).

I was told the most dealers in the Northwest have run out of GMTs. GMTs are SO hot, they have resorted to trading Camaros for the trucks (bigger profits on trucks).

Having little to nothing to sell doesn't help these numbers any. The Chevy lots all over Portland are looking empty.

And they might want to stay that way....by no means is the worst behind us yet.....

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I think he real question is our long term direction as a nation. As Oldsmoboi said, anyone who wants things to return to the way things were needs an anvil dropped on their head...

Chris

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