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July car sales head for strongest month since '09 clunkers program

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July car sales head for strongest month since '09 clunkers program



Sales of cars and trucks in July are on track to reach their best pace since last August when vehicle sales were boosted by the federal government’s cash-for-clunkers incentive program.

Dealers and analysts say consumers appear to be returning to dealerships even though overall economic trends remain mixed and manufacturers only modestly increased incentives.

“Business is up,” said Jack Fitzgerald, owner of Fitzgerald Auto Malls in Kensington, Md. Fitzgerald said sales increased at most of his 27 dealerships in July, including both domestic and import brands.

“Good people can only go so long without a car,” he said.

In July, the seasonally adjusted annual rate is estimated to be 11.8 million, according to vehicle pricing Web site TrueCar.com, and 12.2 million according J.D. Power and Associates. Those estimates would make July the strongest selling month since last August when government incentives boosted the selling rate to 14.9 million.

The seasonally adjusted annual sales rate indicates what sales would total for the year if demand remained constant over 12 months, adjusting for seasonal factors. It’s an easy way to reference month-to-month performance.

“The actual retail demand has been quite strong in July, and that happened without incentive spending going up,” said Jesse Toprak, vice president of industry trends for researcher Truecar.com. “It seemed like there was a lot of pent-up demand.”

Toprak estimates that General Motors, which emerged from bankruptcy last July, will report a 23.2% sales gain this July, the largest increase among major automakers.

He expects sales to increase 8.4% at Ford and 1.3% at Chrysler. Toyota, still dealing with fallout from its recalls for sudden acceleration, is expected to report a 4.4% sales decline. Sales may increase 4.0% for Honda, 4.5% for Nissan and 14.2% for Hyundai.

Nicole Ernst, general manager of Friendly Ford in Monroe, said sales are flat at her dealership. Ernst is counting that as a victory, because cash-for-clunkers, which gave consumers a $3,500 to $4,500 voucher to trade a gas guzzler for an efficient vehicle, started to skew sales results last July.

“We are only 18 cars away from where we were last July and we still have a weekend to go,” Ernst said.

When 2010 began, automakers expected industry sales to increase modestly throughout the year as the economy recovered from the recession. And for the first six months of this year, sales of cars and trucks increased 16.7%.

But in June, the rate of sales slowed, job losses increased and consumer confidence fell, prompting many in the industry, including Ford, to trim their forecasts for the year. Now, July’s sales trends are providing renewed hope.

“This month is looking better than June,” Ford CFO Lewis Booth said Monday. “It looks like the retail market is up. … It makes us think that maybe June was the aberration.”



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Report: July sales particularly strong

By Andrew Ganz

Mid-summer is traditionally a time when automakers try to clear out inventory in anticipation of new models arriving in the fall, but rarely are sales especially strong. However, according industry analysts, July sales are looking especially bright this year

Automakers won’t actually report July results for another week since there are still several selling days, but that’s not stopping TrueCar and J.D. Power from increasing their annualized selling rates to 11.8 and 12.2 million vehicles, respectively. Those figures put July on track to be the best sales month since last August, when the federal “Cash for Clunkers” program artificially increased annual sales rates to an impressive 14.9 million vehicles.

The adjusted annual sales rate implies that a month’s sales, if they weren’t out of the ordinary, would contribute to overall yearly sales at a certain rate.

TrueCar’s Jesse Toprak says that GM will post the biggest gains – a 23.2 percent increase – but that Hyundai (14.2 percent) Ford (8.4 percent), Nissan (4.5 percent), Honda (4 percent) and Chrysler (1.3 percent) will all see year-over-year sales increases. Toyota, however, will likely post a 4.4 percent decrease as it continues to struggle to sell its mainstream models as a result of its safety recall scandals.

“The actual retail demand has been quite strong in July, and that happened without incentive spending going up,” said Toprak, vice president of industry trends for researcher for TrueCar, told The Detroit Free Press. “It seemed like there was a lot of pent-up demand.”



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