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Car sales forecasts slashed by analysts

August 18, 2011 | 10:04 am

Photo: Kay Lee, right, listens to car salesman Larry Liu at a Ford dealership in Colma, Calif. Credit: Bloomberg News The sluggish economy is pushing analysts to slash their forecasts for auto sales this year. 

“Without a significant increase in incentive levels or a reversal of the economic woes, there isn’t a  compelling reason for those consumers sitting on the fence to return to dealer showrooms and purchase a vehicle,” said Jeff Schuster, chief forecaster at J.D. Power & Associates.

He said there are plenty of people who have delayed purchases and either need or want to buy new cars but are spooked by “economic and financial uncertainty.”

Power has cut its 2011 sales forecast to 12.6 million light vehicles from 12.9 million. The lower figure would still be a 9% gain from last year. For 2012, Power reduced its sales projection to 14.1 million units from 14.7 million.

IHS Automotive also has pared its forecast for 2011 sales by 200,000 autos, to 12.5 million. It slashed its 2012 forecast to 13.5 million from 14.6 million vehicles.

Earlier this year, Ford Motor Co. projected 2011 sales industrywide at 12.7 million to 13.3 million. The company now says it expects sales will be closer to the bottom of that range and unlikely to exceed 13 million.

But data provider is sticking with an estimate of 12.9 million vehicle sales this year. 

Edmunds economist Lacey Plache says increased inventory –- a result of the recovery of Japanese automakers from the devastating quake in Japan and the subsequent manufacturing disruptions -- and lower car prices in the last quarter of the year will recapture sales lost earlier in 2011.

Plache believes the annualized rate of auto sales has started to increase  in recent weeks despite the gyrations on the stock market and mixed economic news.

“This is another sign of underlying demand strength,” Plache said. “Since the industry maintained sales in the face of last week’s turmoil and uncertainty, then it is likely that confidence has not been undermined enough to prevent the release of pent-up demand this fall.”


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-- Jerry Hirsch

Photo: Kay Lee, right, listens to car salesman Larry Liu at a Ford dealership in Colma, Calif. Credit: Bloomberg News