Auto Sales Likely to Continue Slowing

The recovery in auto sales is sputtering, with forecasters expecting August sales to show a continuation of the uncertain trend seen since March, reported The Detroit News.

Compared with last August, when the government's cash for clunkers program fueled a spike in demand, monthly sales are likely to be down sharply.

But some forecasters believe the selling pace may have slowed even since July, when the seasonally adjusted annualized rate of sales totaled 11.54 million cars and light trucks.

August sales estimates range from as high as 11.8 million light vehicles to fewer than 11 million.

Some forecasters are now trimming their annual forecasts amid growing expectations that the economy will recover very slowly.

Paul Taylor, an economist at the National Automobile Dealers Association, said the weak housing market is holding back the recovery in auto sales. Many people figure that if they were going to lose their jobs, they would have lost them by now, Taylor said. But homeowners aren't confident that the housing market is recovering. "We need it to be solidly flat or up," he said. "That's not happening."

Many indicators point to a slowdown in the recovery: Housing sales plunged 25.5 percent in July; capital goods orders, excluding weaponry and aircraft, fell last month; and stocks have been losing value.

J.D. Power and Associates estimates this month's selling rate at 11.8 million vehicles, up from July. But it predicted that the retail selling rate -- auto sales through dealerships, as opposed to fleet business -- dropped to 8.9 million light vehicles from 9.2 million in July.

Deutsche Bank puts this month's selling rate at 11.5 million light vehicles, while J.P. Morgan expects it to be lower.