Westlake Village, California – New light-vehicle sales in the U.S. are forecast to drop to 14.2 million units in 2008, a 12 per cent decrease from the 16.1 million units sold in 2007, according to a report by J.D. Power and Associates.

The forecast revision, which represents a reduction of 750,000 units from the 14.95 million projected earlier this year, is prompted by a deteriorating economic environment, prolonged effects of the credit crisis, elevated gas prices and a reduction in the daily rental fleet market. Specifically, fleet sales are projected to drop 21 per cent to 2.6 million units, while retail sales are expected to decline by ten per cent to 11.6 million units.

“While the sluggish economy is the primary driver of the reduction in retail sales, fleet sales are expected to experience an even steeper decrease from 2007,” said Jeff Schuster, executive director of automotive forecasting. “This trend indicates that the automotive industry is making serious efforts to continue reducing fleet sales, while also allowing retail sales to work through the downturn without heavy use of incentives.”

Although sales of smaller vehicles are rapidly increasing, the growth rate of smaller vehicle segments has not been enough to offset significant declines in large-vehicle segments. Retail sales for the compact basic segment in the first half of 2008 were up 28 per cent compared with the same period in 2007, but sales of large vehicles, including large pickups and SUVs, dropped 28 per cent.

Small car sales have also been constrained by a thinning supply. Days to turn (the number of days a vehicle remains on the dealer lot before selling) for the compact basic segment averaged 57 days from January to June 2008, but included a sharp decrease to 47 days from May to June. By contrast, large pickups averaged 85 days from January to June 2008, but increased to 95 days from May to June.

“The weak performance seen in June 2008 is expected to carry over into July, and year-over-year comparisons mark June as the weakest month on a seasonally-adjusted annualized rate since 1993,” Schuster said.

Connect with Autos.ca