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Auto Demand Rising In June

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On: Sat, Jun 25, 2011 at 10:32AM | By: Tim Healey


Auto Demand Rising In June

After slumping in May, sales of new cars and trucks appear to be rebounding this month.

The seasonally adjusted annual sales rate (SAAR) is now expected to be around 12 million units when results are released on July 1.

This comes after a month of May in which the industry was battered by high fuel prices, lowered incentives, and shortages on available vehicles that were caused by March's natural disaster in Japan.

Sales increases could range from 8 percent to 14 percent year-over-year, according to various forecasts.

Dropping fuel prices have helped spur sales, as has news that inventory shortages aren't as bad as initially feared.

This has given forecasters reason for optimism. Analysts believe that if the economy continues to show positive signs, then the automotive industry should continue to rebound through the second half of 2011.

Indeed, the industry did seem to be trending upward before May, and the factors dragging sales down were pretty clearly temporary in nature. Now, with summer just getting in to full swing, the news is once again looking promising for automakers, dealers, and suppliers.

The seasonal adjusted sales rate had climbed for seven straight months before May.

For June 2011, analysts are forecasting sales of 884,800, which means a SAAR of 9.9 million, better than May's 9.3 million number. Demand is expected to be up 8 percent over June 2010, to 1.1 million, for an annualized rate of 12 million.

Fueling the sales boost is demand for full-size pickup trucks and compact cars, which comprised 10.6 percent and 17.6 percent of sales, respectively.

This is, perhaps, not surprising. Large trucks are a staple of American sales, even in tough economic times, and even when gas prices rise. Compact cars no doubt benefit both from higher prices at the pump and a more competitive class with more desirable entries.

It will still be some time (if ever) before the industry gets back to the pre-recession sales volumes of 16 or 17 million units a year. But there's no doubt that these numbers are encouraging.




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