AppId is over the quota
AppId is over the quota
By
Lacey Plache September 21, 2011
Edmunds.com has revised its 2011 forecast to 12.6 million vehicles, down 300,000 units from the 12.9 million vehicles projected earlier this year. An analysis of the last few months showed that while supply issues stemming from the March 11 earthquake in Japan are slowly resolving, new-vehicle sales are unlikely to return to highs realized earlier this year as rapidly as originally expected. Although some consumers who deferred purchases earlier this summer are responding to improving vehicle supply and more competitive prices, declining economic conditions are keeping other consumers away from dealer lots and will continue to do so at least through the end of the year.
Previous Forecast: 12.9 Million
Edmunds.com started the year with a forecast of 12.9 million units for 2011, based on the pace of sales growth during the recovery to date. Edmunds.com expected recession weariness and bolstered consumer confidence, buoyed by stock-market gains, to combine with increasingly available credit, driving consumers to market and also releasing pent-up demand that had been accumulating since the recession. There was concern, however, that the sluggish labor and housing markets would continue to temper sales growth, and auto sales also were threatened by external risks to the U.S. economy that ranged from a slowing China to another flare-up of Europe’s debt troubles.
Growth Not Sustainable
The year opened with several months of growing momentum in new-vehicle sales. The average monthly Seasonally Adjusted Annual Rate (SAAR) of 13 million vehicles from January through April raised the question of whether annual sales of greater than 13 million were within reach in 2011. Monthly car sales improved 18 percent, on average, compared with the previous year and adjusted for the number of selling days per month. One key factor driving early-year sales gains was enhanced consumer confidence, which in turn was boosted by wealth effects from a rising stock market and by a general optimism that the recovery might be gaining strength. Additionally, from February through April, the labor market showed signs of new life as the economy added 250,000 new private sector jobs per month on average - a rate not seen since the recession started in December, 2007. Moreover, auto sales received additional impetus early in the year from a zealous General Motors incentive initiative.
The March 11 earthquake in Japan derailed the strong early-2011 sales pace. The earthquake’s aftershocks included disrupted production, vehicle and component supply shortages and higher prices for the auto industry. Although auto sales dipped beginning in May, Edmunds.com expected that lower sales were due to consumers delaying purchases and would be made up later in the year when vehicle availability improved and prices moderated. Those factors caused Edmunds.com to maintain its 12.9 million 2011 auto sales forecast. In addition to the impact of the Japan earthquake, auto sales faced as great or greater a constraint from declining economic conditions during the last four months. Higher gasoline prices, for example, increased demand in the more fuel-efficient segments where supply already was stretched thin by earthquake-related production issues. But supply restrictions also were expected to lessen as Japanese automakers’ production recovered.
Other economic conditions threaten to remain a headwind for auto sales in the months to come. Consumer confidence has trended downward since April, following stock-market volatility and growing economic uncertainty; it reached its lowest level since the recession in August. Given that August featured exceptional market turmoil and insecurity, confidence might recover at least some ground in what is turning out to be a calmer September, as well as in the coming months. In fact, the mid-month reading for the University of Michigan’s consumer sentiment index showed a small gain in the first two weeks of September compared with the end of August. But, according to the underlying survey, an increasing number of consumers expect economic conditions to worsen in the months to come, making substantial gains in confidence unlikely in the fourth quarter.
Additionally, hiring slowed beginning in May and despite a slight upswing in July, came to an abrupt halt in August, when no new jobs were added. Clearly, businesses were wary of expansion, given the souring economic outlook that dominated as the summer closed. As long as the economic outlook for the final quarter of 2011 and all of 2012 remains cautionary – economists cite a one-in-three chance of another recession – the likelihood of substantial job creation also is small. Indeed, many economists recently cut back forecasts for job growth in the coming months.
Lower Expansion Rates
As a result of the earthquake’s effects on supply and prices, as well as the economic soft patch that started in May, the pace of auto sales growth dropped back from 18 percent year-over-year to 4 percent during May and June. In July, as auto sales picked up and fuel prices stabilized, evidence suggested that both auto sales and the economy were on an upward swing. The stock market turned up on reports of strong second-quarter earnings from many companies. Consumer confidence improved. Firms began to hire again. In addition, consumers began spending more freely, as retail sales demonstrated strength even beyond auto sales.
Even so, July more represented hope for auto sales momentum to resume, rather than an actual resumption. The SAAR rebounded to just 12.2 million units. Year-over-year growth in autos-adjusted for selling days - remained just below 5 percent. Supply improved further in August, but declining economic conditions and abundant uncertainty kept the SAAR at 12.1 million units, just below July’s SAAR. Growth slowed to 3 percent. Although early September sales data imply a SAAR in the low-to-mid 2-million range, growth is unlikely to increase beyond 5 to 6 percent for September. In addition, given the strong performance of auto sales last fall, monthly year-over-year growth rates of 3 to 6 percent are more likely than a return to the early-year average growth rate of 18 percent.
Updated Forecast
Buying conditions will continue to improve through the end of the year as auto supply recovers and prices become more competitive. Incentives could also draw out would-be car purchasers in the fourth quarter due to the usual holiday events, as well as due to heightened competition from normalized supply. But September’s expected performance clearly indicates that the new “normal” for auto sales growth is closer to this summer’s 4 percent rather than the 18 percent seen earlier this year. Economic conditions are unlikely to strengthen substantially, given the debt problems in the U.S. and Europe and abundant uncertainty, which will temper both hiring and consumer spending.
In particular, reduced consumer confidence will cause more buyers to delay, or indefinitely postpone, new-vehicle purchases. Without substantial deferred demand entering the market, the SAAR is more likely to average in the mid-12 million range in the coming months rather than return to or surpass the first quarter’s monthly average SAAR of 13 million. To achieve Edmunds.com’s original forecast of 12.9 million units for 2011, auto sales would have to grow more than 15 percent in the fourth quarter. Assuming more realistic growth rates of 3-6 percent, 2011 sales are more likely to total approximately 12.6 million units.
Lacey Plache: is the Chief Economist for Edmunds.com. Follow @AutoEconomist on Twitter.
View the original article here
Peliculas Online
The obvious standout is Honda with a 17-percent jump. Hence my caution. Honda was hardest hit with supply disruptions and pricing issues and its recovery has been the slowest. Honda shipments have started to improve. It seems clear that Honda has a waiting list of buyers that dealers are working through – some of them created by the Honda Promise that allowed consumers to take advantage of special promotions before the vehicles arrived on dealer lots this fall. As deliveries continue to improve and the waiting list is worked through, I would expect Honda sales to slow.
