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U.S. Auto Sales Estimates Cut as Confidence Slows Rebound

August 18, 2011
4 min to read


Analysts are reducing estimates for U.S. automobile sales for 2011 and 2012, citing weak consumer confidence that has slowed the pace of recovery since May.


J.D. Power & Associates lowered its estimate for U.S. auto sales in 2011 by 300,000 light vehicles to 12.6 million, the Westlake Village, California-based researcher said today in a statement. J.D. Power reduced its estimate for next year by 600,000 cars and light trucks to 14.1 million, reported Bloomberg.

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The reduction by J.D. Power follows analysts at IHS Automotive in cutting expectations below the sales forecasts given by General Motors Co. and Ford Motor Co., the largest U.S. automakers. JPMorgan Chase & Co., Goldman Sachs Group Inc. and RBC Capital Markets LLC also shaved estimates this month.


“The thought of a second-half recovery is just not in the cards,” Jeff Schuster, J.D. Power’s executive director of global forecasting, said today in a phone interview. “It really comes down to consumer confidence and consumers just don’t have any right now. There just really isn’t a strong reason to go make that big-ticket purchase.”


Consumer confidence in the U.S. economic outlook slumped in August to the lowest level since the recession, raising the risk that spending will dry up. The Bloomberg Consumer Comfort Index’s monthly expectations gauge dropped to minus 34, the weakest since March 2009, from minus 22 in July.


Applications for unemployment benefits climbed last week to the highest level in a month, Labor Department figures showed today in Washington.


Goldman Sachs today lowered its 2012 U.S. auto sales estimate by 1 million light vehicles to 13.5 million. The New York-based investment bank sees 12.8 million deliveries this year. RBC Capital earlier this week lowered its estimates for 2011 by 200,000 units to 12.5 million and by 700,000 to 13.3 million for next year.

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“Fragile U.S. consumer sentiment and recently tempered economic expectations” led to the reductions, Seth Weber, an RBC Capital analyst based in New York, said in an Aug. 16 research note.


IHS Automotive reduced its estimate for U.S. auto sales in 2011 by 200,000 units to 12.5 million light vehicles, Rebecca Lindland, an IHS analyst, said in an Aug. 11 phone interview.


IHS cut its estimate for 2012 deliveries in the U.S. to 13.5 million vehicles, from 14.7 million, Lindland said. The Lexington, Massachusetts-based researcher also lowered its estimate for 2013 light-vehicle sales to 15 million from 15.5 million.


Himanshu Patel, a JPMorgan analyst, lowered his 2011 and 2012 estimates by a combined 700,000 vehicle sales, to 12.8 million this year and 13.5 million next year, in an Aug. 5 note.


GM and Dearborn, Michigan-based Ford forecast at least 13 million new-vehicle sales in 2011, including medium- and heavy- duty trucks. The U.S. averaged annual light-vehicle deliveries of 16.8 million vehicles from 2000 to 2007, according to Autodata Corp., a Woodcliff Lake, New Jersey-based research company.

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“There’s a lot of turmoil in the business and turmoil means uncertainty, so we’re a little unsure of these numbers,” Chief Executive Officer Dan Akerson of Detroit-based GM, told analysts Aug. 9.


GM fell $1.34, or 5.4 percent, to $23.60 at 4 p.m. in New York Stock Exchange composite trading, the lowest since its initial public offering in November. Ford declined 73 cents to $10.38. The shares have plunged 38 percent this year.


J.D. Power sees a 12.1 million seasonally adjusted annualized rate for August. Analysts and automakers had been predicting a “snap back” in demand once inventories recovered from the March earthquake and tsunami in Japan, which disrupted production and led to shortages of parts and finished vehicles.


“We’re not seeing that snap back, and given all the variables out there it’s a lower probability that we’re going to see that happen this year,” Schuster said today.


Sales ran at a seasonally adjusted annualized rate of 12.2 million through the first two weeks of August, Edmunds.com said in an e-mailed statement. The Santa Monica, California-based researcher still predicts 12.9 million deliveries this year and 13.9 million in 2012.

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J.D. Power’s estimate for full-year sales assumes that the industry will average a 12.8 million seasonally adjusted annualized rate in the last four months of the year, Schuster said. Lower gasoline prices and higher spending on sales incentives may help the sales pace accelerate to those levels late this year, he said.


If the pace of deliveries stays about flat, sales may finish the year at 12.4 million, according to J.D. Power’s estimates. “If August comes in at the level we’re expecting, that gives us a really clear indication that we’re running out” of time in 2011 “to get going again,” Schuster said.

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