Following the lead of automakers and analysts, J.D. Power and Associates has cut its projection of 2008 U.S. light-vehicle sales to 14.2 million units.
That is down 750,000 units from the 14.95 million that Power projected earlier this year and down from the 16.2 million units sold in 2007.
Automakers, including General Motors, have slashed their sales forecasts in recent months. Earlier this month, GM said it expects U.S. light-vehicle sales of 14 million units in 2008 and 2009.
Power cited deteriorating economic conditions, the prolonged credit crisis and $4-a-gallon gasoline for causing consumers to stall on buying new vehicles.
Lower fleet sales by automakers also were blamed. Power predicts fleet sales this year will drop to 2.6 million units, a 21 percent decrease from 2007.
While the sluggish economy is the primary driver of the reduction in retail sales, fleet sales are expected to experience an even steeper decrease from 2007, Jeff Schuster, Powers executive director of automotive forecasting, said in a statement.
This trend indicates that the automotive industry is making serious efforts to continue reducing fleet sales, while also allowing retail sales to work through the downturn without heavy use of incentives.
According to Power estimates, retail sales will decline 10 percent to 11.6 million units, as rapidly increasing sales of smaller vehicles wont make up for the shortfall in pickups and SUVs.
The weak performance seen in June 2008 is expected to carry over into July, and year-over-year comparisons mark June as the weakest month on a seasonally adjusted annualized rate since 1993, Schuster said in a statement.
Shortages of small cars also will increasingly be a problem, according to Power data. From May to June, compacts sat on dealership lots for 47 days before selling. That compares with a 57-day average for the first half of the year.
The downward sales trend may continue for the rest of the year, Power says.
The economic stress and uncertainty that consumers may face over the next six to 12 months will likely result in a continuous period of slow new-vehicle sales, Schuster said. It is also unlikely that a pronounced rebound will occur in 2009 and conditions could actually worsen before they improve.
Still, Power projects sales to improve to 14.3 million in 2009, with retail sales expected to rise to 11.7 million units. Fleet sales are projected to remain flat at 2.6 million units.