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Throughout The Car Industry

Car Sales May Droop As Stock Market/Economy Suffer

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On: Thu, Sep 1, 2011 at 3:19PM | By: Chris Weiss

Car Sales May Droop As Stock Market/Economy Suffer

In January, Edmunds' Auto Observer predicted that 2011 automobile sales would rise to 12.9 million in 2011, an increase over 2010's 11.6 million sales and 2009's record-low 10.4 million. The report expected improving credit conditions to help fuel auto sales, and didn't foresee any supply-side problems. After months of headlines about economic woes, credit crunches, and Japanese auto-industry supply problems, many analysts are adjusting sales forecasts.

According to the Associated Press (AP), buyers are becoming increasingly wary of new auto purchases as the stock market swings wildly. Salt Lake City auto dealer Jerry Seiner tells the AP that his showrooms tend to be empty when the stock market is down and active when it's up.

While anticipated Congressional cuts and stock market swings aren't boding well for the industry for the rest of the year, sales predictions haven't gotten too dire of yet. J.D. Power and Associates adjusted its 2012 prediction by 2 percent, bringing it down to 12.6 million (from 12.9 percent, to save you a little math). That's still well above last year's sales.

John Humphrey, senior VP of automotive operations at J.D. Power, explained to Reuters: "The economy and automotive industry continue to wrestle with a series of unsettling developments, which are now likely too strong to overcome within 2011."

On the plus side, sagging sales may just lead to better incentives.

J.D. Power's executive director of global forecasting, Jeff Schuster, said: "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. There is little question that a strong level of pent-up demand exists, but economic and financial uncertainty is keeping it from being released."

Economic woes aren't likely to make an abrupt 180 anytime soon, so expect to see some increased incentives.


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