June Auto Sales Suggest The Market Isn't Recovering

July 7, 2010

We're accustomed to seeing some gamesmanship when automakers reveal their monthly sales figures, but this month, the spinning was unusually intense.  The take-away, though, may not be good for those in the market for a new car.Many are pointing out that they beat last June's sales figures, and year-over-year sales are a normal comparison point in the auto industry -- but last June was one of the worst months the auto industry has seen in decades.  General Motors and Chrysler had filed for bankruptcy, nervous Americans were sitting out of the market, and Congress hadn't yet launched the Cash for Clunkers program.

So yes, they're trumpeting the fact that they beat last June's figures. But last June's figures weren't exactly a high bar to clear.

Compare this June to May, however, and the news doesn't look as good.  The Big Three all saw sales drop between 12 and 13 percent.  Toyota's sales fell by 14 percent.  Honda slipped by nine percent.  Nissan?  A jaw-dropping 23 percent freefall.  Only Hyundai bucked the trend, with a 4 percent increase.

Yet, automakers don't seem to be offering aggressive new incentives to trigger a sales boost.  They actually spent less on incentives in June than in May.  There isn't an across-the-board trend in incentives.  Jesse Toprak, Vice President of Industry Trends and Insights at TrueCar.com explains, "While overall incentive spending was down in June from a year ago, certain brands have actually increased incentives, such as Ford, GM, Honda and Toyota."They aren't discounting the most desirable cars, though.  Toprak explains, "Manufacturers have become much better at optimizing their incentive programs -- figuring out just how much they need to spend for each model, what type of incentive, etc."  They're less likely to offer heavy discounts on cars that are selling well this month.

They're not forced to discount as heavily, he explains, because they're managing inventories better now than at the start of the recession.  "Most automakers have dramatically cut down their production in the last couple of years to better match their inventory levels to actual market demand," Toprak notes.

It isn't all bad news for those who need a new car now.  Toprak says, "The months of July and August are actually some of the best times to buy, especially the 2010 model year vehicles, as we get a good combination of big discounts as well as a good selection of vehicles." If you wait too late in the summer, "current model year vehicles become sparse...so if you're picky about the color or the option combination of the vehicle you'd like to buy, we advise not waiting too long."

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