August 20, 2002


Rebates and incentives fuel strong U.S. car sales in August

Westlake Village, California – Consumers, scrambling to take advantage of record incentives that are scheduled to expire next month, are keeping sales of U.S. light vehicles at exceptionally high levels, according to J.D. Power and Associates.

Total new light-vehicle sales in August are projected to hit an 18.4 million-unit seasonally adjusted annualized rate (SAAR), up from July’s 18.1 million SAAR, based on Power Information Network (PIN) retail sales data from the first two weeks of the month. Actual units sold in August are expected to reach 1.69 million.

“As surprising as an 18.4 million-unit SAAR may seem, we’re actually basing that on a fairly conservative assessment,” said Walter McManus, executive director of global forecasting at J.D. Power and Associates. “We would not be surprised if the numbers at the end of the month actually come in a bit stronger.”

Aggressive incentives are the driver behind the recent sales boom. The industry average total of cash-plus-interest subvention has averaged approximately $1,400 per vehicle for the past two months.

Most of the current rebate and incentive offers expire Sept. 3, the day after Labor Day. If automakers extend the deadline for the current incentive programs or offer new ones, strong sales could continue in September.

“If one automaker extends its incentives, it is very likely the others will follow suit,” said McManus. “If that happens, it’s quite possible momentum from the third quarter will carry over into the fourth quarter.”

Due to strong light-vehicle sales this summer, J.D. Power and Associates is revising its 2002 calendar-year forecast to 16.8 million units, up from its previous forecast of 16.5 million units.

J.D. Power and Associates’ sales forecasts are derived from a joint effort between its Global Forecasting Department and Power Information Network (PIN), a division of J.D. Power and Associates that compiles new-vehicle retail transaction data from more than 5,300 participating auto franchises in 25 U.S. markets.

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