24/7 Wall St. TV: August Cars Sales, And Beyond

August light vehicle sales in the US have to be good. The “clunkers” program produced almost 700,000 sales. The industry might as well enjoy it while its lasts. September and the rest of the year will be awful.

Edmunds predicts that the 1.17 million cars will be sold this month, which is up 18% from last month and down “only” 6% from last year. Drops of 30% have been closer to the norm in 2009.

The annual sales rate actually hit 19 million in late July. but is only half of that now, the car research company says.

[youtube=http://www.youtube.com/watch?v=jw52UbXtsKA&w=560&h=340&fmt=18]

This Labor Day will be a depressing one for the car companies this year. The effect of the “clunkers” program will be over and the industry will face four very hard months of what are likely to be extremely poor sales, even with new 2010 models coming out. Edmunds points out “Current purchase intent is down 50 percent from the Cash for Clunkers peak, and down 11 percent from the June average,” noted Senior Analyst David Tompkins, PhD. “Day by day, intent is slipping: Sunday activity was down 21% from Saturday, then Tuesday activity was down 16 percent from Monday.”

Put another way, without the government’s incentive, the domestic auto industry has not recovered at all.

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Executive Producer:  Philip MacDonald