Incentive-fueled demand for new vehicles could boost July U.S. light-vehicle sales above rates already forecast to be the highest levels so far this year, an influential analyst said late Thursday.
Market research firm J.D. Power and Associates has increased its July sales rate prediction to 10.7 million units, J.D. Power analyst Jeff Schuster said, amid reports that overwhelming sales would cause the government to suspend its cash-for-clunkers program within the day. Schuster had forecast earlier this month that July sales would reach a 10-million-unit sales rate for the first time this year, beginning a recovery from 27-year lows.
But data from last weeks sales caused J.D. Power analysts to rethink that prediction, he said.
Its very possible that the month could close at 11 (million-unit-rate) or even above 11, if this week was stronger than we had anticipated, Schuster said.
Another forecast issued today by Credit Suisse estimated the sales rate for July could range between 12.1 million and 12.4 million vehicles.
The firm said the midpoint of its estimate would be about 3 percent below the year-ago pace of 12.6 million, "and up sharply from last months pace of 9.7 million." Sales will still fall 4-6 percent from July 2008. First half U.S. sales fell 35 percent from 2008.
The governments so-called cash-for-clunkers program offered up to $4,500 to car buyers who traded in their gas guzzlers for more fuel efficient new vehicles. The program has $1 billion in funding -- enough to cover an estimated 250,000 trade-ins.
For the program to be suspended because dealers had made enough sales to use up all allotted funding, the average dealer's July sales would have been 35 to 40 percent cash-for-guzzlers-related, which seems high, but not completely out of the realm. Schuster said. Its not unreasonable.
The program, formally launched July 24, had a Nov. 1 expiration date, but sources said the administration would suspend it within the next day. The White House said it is assessing the situation, but denied any decision has been made to suspend the program.
Schuster had told Automotive News last week he expected the $1 billion to run out in October.
Automakers report July sales results on Monday.