WESTLAKE VILLAGE, Calif. — Though they have subsided from a rather robust July, there has still been "relative strength" in new-vehicle sales during August, according to J.D. Power and Associates.

The company pointed out that the month's seasonally adjusted selling rate for retail sales will likely be stronger than the pace during the first half of 2010.

However, J.D. Power said the outlook for full-year 2010 isn't as rosy as once expected.

Specifically discussing August, the company predicts that there will be 857,000 retail new-vehicles sold during the month. August's retail SAAR would then be 8.9 million units, compared with the retail SAAR of 9.2 million vehicles during the previous month, according to J.D. Power.

The projected total for retail sales in August is down 22 percent year-over-year when adjusted for fewer selling days this month, but these statistics are skewed by the impact of CARS a year ago, officials noted.

Expected sales for August compare with 878,168 retail units moved in July.

"Incentive levels are down 8 percent from July, but retail light-vehicle sales in August are showing relative strength," stated Jeff Schuster, J.D. Power's executive director of global forecasting.

"While August retail sales are expected to be down 22 percent from August 2009, if the distortion from 2009's CARS program is removed, August 2010 is actually up about 14 percent on a selling day-adjusted basis, signaling continued improvement year-over-year," he continued.

When considering total new-vehicle sales, J.D. Power expects there will be 1.03 million units sold for August, a 15-percent dip from year-ago figures. Again, Cash for Clunkers throws off this comparison.

The total SAAR for August is projected to be 11.8 million vehicles, a lift from the July's total SAAR of 11.5 million and down from the August 2009 rate of 14.1 million.

Looking at fleet sales, in particular, their proportion of the total new-vehicle retail market will likely be 17 percent for August. While this would be weaker than penetration rate so far this year (22 percent), it would mean an 8-percentage-point year-over-year uptick. 

Remainder of 2010 and Beyond

Looking forward, J.D. Power anticipates there will be 9.2 million retail new vehicles sold in full-year in 2010 and 11.6 million total new-vehicle sales. These are down from its previous forecast of 9.4 million vehicles and 11.7 million units, respectively.

The reasoning behind this downward adjustment is the "lower than expected retail sales rate."

Next year will likely see a continuance of the "flattening of the recovery." As such, J.D. Power has trimmed its projections for 2011 new-vehicle retail sales to 10.7 million units and cut its total sales forecast to 13.2 million units.

"Lower consumer spending — fueled by current economic conditions and a high unemployment rate — and lower incentive expectations are impeding the pace of the recovery," Schuster stated.

"While a sharper uptick in vehicle sales was previously expected for 2011, the reality of a prolonged recovery has driven a reduction in the forecast," he added.

Vehicle Production

Moving on to production numbers for North America, 67 percent more units were built so far this year than the year-ago time frame.

The majority of that production uptick (61 percent) has been due to the Big 3.

Thanks to the expected settling down of North American production during the second half of the year, the full-year level will likely be up almost 35 percent year-over-year.

J.D. Power noted that OEMs have been "disciplined" when it comes to inventory levels. When July wrapped up, days' supply was at 52 days. This marked a 3-day decrease compared to where it stood a month earlier.  

"Through industry-wide inventory management, manufacturers are showing impressive restraint in not over-producing," Schuster commented. "However, this restraint is causing shortages in certain vehicle lines, so the desired balance between supply and demand at a model level is still a work in progress."