Westlake Village, California – New-vehicle sales are expected to bounce back in July after sluggish performance in May and June, according to a new forecast by J.D. Power and Associates.

Retail sales in July are expected to come in at 928,000 units, representing a seasonally adjusted annualized rate (SAAR) of 9.4 million units. The selling rate in June 2010 was 8.4 million units, while July 2009 was 8.9 million. However, the company warned that year-over-year comparisons are not as relevant, due to the CARS (Cash for Clunkers) program in 2009, and that retail transactions are the most accurate measurement of consumer demand for new vehicles.

“Consumers appear to be responding to the slight increase in visible incentive spending, which is expected this time of year during typical model-year sell-down,” said Jeff Schuster, executive director of global forecasting. “Even if the deals aren’t as strong as they have been in the past, consumers may be grappling with the notion that these deals are as a good as they’re going to get. In addition, an increase in maturing leases and a less attractive used-car market may be contributing to higher sales volumes.”

While fleet sales are typically low in July, J.D. Power expects them to increase this month from the extremely low levels in July 2009. Such as increase would return total light-vehicle sales for July to levels above one million units.

Despite the strength in retail sales in July, the company said the pattern for the remainder of the year is expected to continue to be volatile, and the forecast has been revised downward slightly to 9.4 million units for retail sales, and 11.7 million units for total sales. Sales are projected to be below the normal range of 15 to 16 million units for at least another two years, Schuster said.

North American vehicle production was up 72 per cent in the first half of 2010, compared with the same period in 2009, as automakers have not been affected by the extended plant shutdowns seen in 2009. However, production in the second half of 2010 is expected to level off and increase by only nine per cent when compared with the second half of 2009. Vehicle inventory has been maintained at its current level. J.D. Power forecasts North American light vehicle production in 2010 to be 11.4 million units, up 34 per cent from 2009.

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