December 2009 Sales Increase Likely

When the December selling period for US car sales comes to a close on January 4, 2010, there should be some good news to report. In fact, if J.D. Power and Associates projections are correct, a 7 percent month over month gain is possible. The company is a global marketing information services business whose services include market research, customer satisfaction, and forecasting.

Cash For Clunkers

Keep in mind that December 2008 was one of the worst months for car sales over the past few years. Sales cratered as the full brunt of the recession was being felt with consumers clamping their wallets and pocketbooks shut. For most of 2009 sales were truly abysmal, but they began to pick up again following the summer’s CARS or cash for clunkers program.

“The market is continuing to improve, with the relative strength of December sales supporting a year-end rally,” said Gary Dilts, senior vice president of global automotive operations at J.D. Power and Associates. “The December selling rate is tracking at 11.2 million units-up nearly 1 million units from one year ago-which sets up 2010 for further recovery.”

If these prediction ring true then December could be the turning point that automakers have been seeking. Sales began to dip in late 2007 and continued to drop off in 2008, before collapsing following the financial crisis of September 2008. Most analysts believe that the low point was reached in March 2009, with a gradual recovery beginning soon thereafter.

A Brighter 2010

Total sales should hit 10.4 million units for the year, with 8.7 million units being retail sales. The difference, of course, is fleet sales. For 2011, J.D. Power and Associates believes automakers will sell 11.5 million units, a far cry from the 17 million units sold earlier this decade, but a market improvement over 2008 and 2009.

Importantly, automakers are learning how to turn a profit with fewer vehicles sold by reducing incentives and upping content. That can help sustain automakers in the years ahead as consumers carefully weigh jumping back into the market.

Source: J.D. Power and Associates

Photo Credit: Chrysler Group, LLC