That slow but steady improvement in auto sales so far this year? It's getting slower.
June's disappointing U.S. vehicle sales have pushed some manufacturers and dealers to lower their projections for the rest of the year. But because they got lean to survive last year and have been slow to ramp up production and inventory this year, most can make money even at low volume.
Dealership group Sonic Automotive is prepared even if industry sales slip below 10 million this year, said Jeff Dyke, executive vice president of operations.
"We got in really good shape, and we're in much better shape," he said. "If we have to face that all over again, it would be a hell of a lot easier."
Thomas Pixton, Mazda Motor Corp.'s senior managing executive officer, said the automaker is worried about a number of global markets and the strength of recovery.
"Whether it's a double dip or a slow recovery, it's very difficult for us to predict," he said in Tokyo.
U.S. light-vehicle sales in June rose just 14 percent from a dismal month a year earlier. More disturbing: The seasonally adjusted annual sales rate of 11.1 million declined from May's 11.8 million. And amid a flurry of bad economic news, auto sales dipped toward the end of the month.
Meanwhile, Europe is preparing for a second-half sales drop now that 2009 government incentives have expired. But exports to China's booming market will help ease the pain for upscale European automakers, and General Motors' Chinese sales have outstripped its U.S. sales.
Sagging consumer confidence, caused by stock market volatility and downbeat economic reports, creates "a self-fulfilling prophecy," says Jeff Schuster, head forecaster at J.D. Power and Associates.
"Consumers are clearly hunkering down in light of the current environment, waiting for signs of a renewed recovery."
Among major players, Chrysler Group led June U.S. results with a 35 percent gain from its bankruptcy-impaired June last year.
Below the industry average were American Honda, up 6 percent, and Toyota Motor Sales U.S.A., up 7 percent. Ford Motor Co. gained 13 percent.
Emily Kolinski Morris, Ford's senior U.S. economist, called for patience. She said most recoveries have a soft spot about 12 months into a turnaround.
"In such periods of mixed data, it's important to monitor the trend data over several months," she told analysts. "Three-month indicators point in a recovery direction."
At GM, Steve Carlisle, vice president of global product planning, said that shifting from stimulus-driven growth to growth from consumer demand will be bumpy. "We expect some volatility," he said. GM sales rose 11 percent in June.
Pixton said Mazda expects a modest global recovery with "lots of ups and downs."
"We're not going to be overly optimistic," he said. "We want to ensure that our business is profitable with a modest recovery -- and if it's better than we expected, then all the better for us."
Yingzi Su, GM's senior economist, said "huge pent-up demand" will gradually overcome the caution of consumers concerned about jobs, housing and income. GM is sticking with its forecast for 2010 industry sales of 11.3 to 11.8 million light units, up from 2009's lowly 10.4 million.
She said: "The economy, we believe, will improve toward the end of the year."