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Analysts Predict U.S. Automotive Industry Recovery Rate

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On: Mon, Aug 30, 2010 at 11:42AM | By: Sherry Christiansen

Analysts Predict U.S. Automotive Industry Recovery Rate

The U.S. auto industry has historically been a primary indicator of how well the economy is doing. Therefore, financial analysts were pleased to report that in July retail auto sales were up, indicating that economic recovery was looking promising. As reported in an automotive news article it, “felt like it dodged a bullet in July when retail sales to consumers held up and confounded forecasts for a drop,” but when August rolled around, the numbers started to fall and the optimism for a quick turn-around of the recession plummeted.

But the game isn’t quite over yet; August sales will forecast the future outlook of what most experts are projecting will be a “slower-than-expected industry recovery,” just as General Motors prepares for its Initial Public Offering. 

This effect on the auto industry is said to result from consumers’ hesitancy to purchase new automobiles because of high unemployment rates and job uncertainty; simply stated, a lack of consumer confidence.

According to Jesse Toprak, analyst at TrueCar.com: "We are crawling around," Jesse Toprak also stated: "It feels like we got a dead car to jump-start but we just can't get it to go over 20 miles an hour."

Predictions are rolling in from a variety of online sources, including TrueCar.com, which makes a prediction of overall U.S. auto sales in August to be down by 3% from last month, and close to 20% down from last year when the cash for clunkers program enabled new car sales to climb.

Edmunds.com predicts Toyota Motor Corp. sales to be down 4.6% in August from July, GM sales to be down 5.8%, Nissan Motor Co. down 6.6%, and Ford Motor Co. down only 3.2%.

Analyst Brian Johnson was quoted to say in a recent statement: "Yet another month with a sales rate in the mid-11 million unit range is unlikely to ease investors' doubts around the shape of the recovery for the auto industry."

Barclays expects August U.S. sales at an 11.5 million unit annual rate with a retail sales decline being offset by fleet sales.

TrueCar has forecast an 11.68 million unit annualized rate for August, and Edmunds.com an 11.8 million rate. In 2009 auto sales plummeted to an all-time low of only 10.4 million units. In 2005 the most recent sales peak hit 17 million sales, and analysts do not expect a return to peak for years.


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