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Analysts downgrade 2011 auto sales forecasts

Auto industry observers cite the sluggish economy in their reduced sales projections.

August 19, 2011|By Jerry Hirsch, Los Angeles Times
  • Kay Lee, right, listens to car salesman Larry Liu at a Ford dealership in Colma, Calif., last month. Earlier this year, Ford projected sales industrywide this year at 12.7 million to 13.3 million. The company now says it expects sales will be closer to the bottom of that range and unlikely to exceed 13 million.
Kay Lee, right, listens to car salesman Larry Liu at a Ford dealership in… (David Paul Morris, Bloomberg )

The sluggish economy is pushing analysts to slash their forecasts for auto sales this year.

"Without a significant increase in incentive levels or a reversal of the economic woes, there isn't a compelling reason for those consumers sitting on the fence to return to dealer showrooms and purchase a vehicle," said Jeff Schuster, chief forecaster at J.D. Power & Associates.

Schuster said plenty of people who have delayed purchases either need or want to buy new cars but are spooked by "economic and financial uncertainty."

J.D. Power has cut its 2011 sales forecast to 12.6 million light vehicles from 12.9 million. The lower figure would still be a 9% gain from last year. For next year, J.D. Power reduced its sales projection to 14.1 million units from 14.7 million.

IHS Automotive also has pared its forecast for sales by 200,000 autos, to 12.5 million this year. It slashed next year's forecast to 13.5 million from 14.6 million vehicles.

Earlier this year, Ford Motor Co. projected sales industrywide this year at 12.7 million to 13.3 million. The company now says it expects sales will be closer to the bottom of that range and unlikely to exceed 13 million.

Data provider Edmunds.com is sticking with an estimate of 12.9 million vehicle sales this year.

Edmunds economist Lacey Plache said increased inventory — a result of the recovery of Japanese automakers from the devastating quake in Japan and subsequent manufacturing disruptions — and lower car prices in the last quarter of the year will recapture sales lost earlier in 2011.

Plache believes the annualized rate of auto sales has started to increase in recent weeks despite the gyrations on the stock market and mixed economic news.

"This is another sign of underlying demand strength," Plache said. "Since the industry maintained sales in the face of last week's turmoil and uncertainty, then it is likely that confidence has not been undermined enough to prevent the release of pent-up demand this fall."

jerry.hirsch@latimes.com

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