July new-vehicle sales are expected to continue the surge dealers have been experiencing so far in 2012. In fact, the market is projected to hit a total new-car SAAR of 14 million this month, according to Kelley Blue Book.

But that’s not all. July new-vehicle retail sales are also expected to post the second strongest year-over-year rates during the past 12 months, according to a monthly sales forecast developed by J.D. Power and Associates’ Power Information Network and LMC Automotive.

J.D. Power predicts July new-vehicle retail sales to come in at 969,200 units.

"Retail sales got off to a fast start in July, and while they’ve slowed down a bit as the month has progressed, through the first 16 selling days, they’re still up 15.1 percent compared to July 2011," said John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates. 

"The positive growth has continued to build, as July is looking strong across most vehicle segments, as well as for many of the major manufacturers,” he added.

J.D. Power and LMC Automotive are calling for total new-vehicle sales to reach 1.17 million, compared to 1.06 million sales in July 2011. The total SAAR would be 14.1 million.

TrueCar.com analysts agree, also forecasting the total SAAR to rise above 14 million.

“The July 2012 forecast translates into a seasonally adjusted annualized rate of 14.1 million new car sales, up from 12.2 million in July 2011 and down from 14.1 million in June 2012,” site officials shared.

For monthly sales, TrueCar is expecting total new-vehicle sales  to come in at 1.17 million units, up 10.6 percent from July 2011 and down 8.8 percent from June 2012 on an unadjusted basis.

Next up was Edmunds.com.

Analysts there are predicting  total new-vehicle sales of 1.17 million new cars sold for July, coming to a  total SAAR of 14.0 million.

“The projected sales would be a 9.2-percent decrease from June 2012, but a 10.2-percent increase from July 2011 — even with two fewer selling days, year over year,” Edmunds.com analysts continued.

“July generally has the lowest mix of fleet sales every year, so this month tested the strength of the retail market,” says Edmunds.com senior analyst Jessica Caldwell.

“With a pace that’s still on track for around 14 million vehicles, it’s a good sign that fleet is not carrying the industry,” she added.

And it seems most all of the major segments may show year-over-year sales gains in July, with the exception of the midsize CUV segment, J.D. Power explained.

The sub-compact conventional, midsize conventional and compact conventional segments are projected to show year-over-year increases of 28 percent or more, officials shared.

What is Pushing the Sales Growth?

KBB noted that with the daily selling rate projected to top 48,300 light-vehicle sales per day, which is better than last month’s 47,500 sales per day and nearly 19 percent above the July 2011 pace, midsize cars will remain the “top-selling segment.”

“Midsize cars remain the top-selling segment in July.  The redesigned Toyota Camry has been a favorite among consumers since launching earlier this year, and we expect the redesigned 2013 Nissan Altima to add further fuel to the fire this month,” said Alec Gutierrez, senior market analyst of automotive insights for KBB.

“The segment only stands to push industry sales further later this year when the hotly anticipated redesigns of the Honda Accord, Ford Fusion and Chevrolet Malibu arrive at dealerships,” he continued.

Moreover, KBB also cited pent-up demand and strong redesigns as pushing July’s high sales numbers.

“Although the economy shows signs of weakness, consumer demand remains resilient and continues to drive sales consistently upward,” officials shared.

But as many shoppers delayed vehicle purchases during the height of the past recession, pushing the average age of vehicles on the road to 11 years, many are returning to the lots out of necessity.

KBB noted that according to the Q2 Consumer Sentiment Survey conducted by Kelley Blue Book Market Intelligence, 30 percent of all in-market consumers said that the primary reason they are shopping for a new vehicle is because their existing vehicle’s mileage is too high. 

And it looks as if many of these returning customers have more options to choose from, with supply on the rebound, as well.

In fact, KBB explained there is nearly a 60-day supply of vehicles available for sale in early July, with OEMs ramping up incentives this summer to make way for 2013 model-year vehicles.  

“In terms of incentives, cash rebates are available on trucks and SUVs as well as those models with a 2013 model-year redesign either currently on sale or expected to arrive later this year.  Even for models with little to no cash rebate support, low interest rates and lease deals await consumers,” the company further explained.

“Consumers had even more options to choose from last month as the highly anticipated all-new 2013 Nissan Altima, Ford Escape and Dodge Dart went on sale for the first time,” said Gutierrez. 

“These vehicles have received favorable reviews thus far and only add to an already-robust selection of strong redesigns and introductions from nearly every manufacturer across all product categories that have hit showrooms in the last few years,” he continued.

And though used prices have been falling slightly in the past few months, contrary to the overriding trend this year, KBB contends many customers are looking to new cars as many consumers are choosing to purchase a new vehicle rather than pay for an expansive late-model unit.

Lastly, J.D. Power cited long-term financing as a “key driver” in sales growth.

"Long-term financing is a key driver in sales growth," said Humphrey.  "Loan terms and credit availability are bringing consumers back into the market who have been shut out since the recession began in 2008."   

In fact, data from the company’s Power Information Network shows that new-vehicle loans of 72 months or greater account for 30 percent of retail sales in July 2012, up from 26.7 percent in July 211.

Looking Forward

Wrapping up its commentary on the month’s new-vehicle sales, KBB noted that the automotive market may continue to improve, despite a “slowing” in the U.S. economic recovery.

“Vehicle sales still are expected to top 14.2 million units overall in 2012, despite slowing in the U.S. economic recovery in recent months,” KBB officials noted.

“This assumes consumer demand remains strong enough to overcome the worsening economic picture," they added.

And J.D. Power and its partners had a similar prediction.

The company explained that despite the potential economic downturn in light of the weakening national labor market, “construction is gaining traction, which is typically a leading indicator of recovery.”

Given this atmosphere, on top of pent-up demand, LMC Automotive is maintaining its 2012 forecast for light-vehicle sales at 14.5 million units, with retail sales at 11.6 million units.

"The automotive industry is closely watching the sales performance over the next two months as the industry wrestles with a mixed bag of economic signals," said Jeff Schuster, senior vice president of forecasting at LMC Automotive.

"Given the economic slowdown and the increasing likelihood that we see a second half boost in auto sales there is approximately 150,000 units of risk to the 2012 forecast,” he concluded.

Editor’s Note: See Monday’s Auto Remarketing Today to see which automakers will benefit most from July’s predicted high sales, as well as info on incentive spending and production rates for this month.