Car sales pace accelerates as deal-seekers come out

(July 21, 2010) reports that new cars are selling at a rate close to 12 million SAAR (Seasonally Adjusted Annual Rate) so far this month. However, industry observers should not misread this as a sign of recovery for the industry.

"July and August sales may suggest a rebound but the underlying trends haven't changed. The market mostly consists of deal-seekers today, and July and August are historically among the best months for picking up bargains," stated CEO Jeremy Anwyl. "The cloud behind the silver lining is that September, October and November will probably be soft, since the old model inventory is largely gone by then, and so are the deals — or so car-shoppers have become conditioned to expect." analysis indicates that in June 2010, 88 percent of new cars sold were from the 2010 model year. Traditionally by November, three-quarters of new cars sold are from the new model year and the old model year does not fully sell out until June of the following year.

Consumer psychology also drives people to believe that car incentives are high now, but in truth most car incentives are not particularly generous today, stated Senior Analyst Jessica Caldwell. "Inventory is relatively low and automakers are reluctant to cut into profit margins more than necessary. However, brands are advertising big sales events and consumers are responding."

Caldwell pointed to Nissan as perhaps the biggest winner this month, as early figures suggest that the brand may be up approximately 25 percent from June's levels. "Nissan has the most aggressive deals in the industry; the company is proving that business can be bought today."

"Remember that comparisons with last summer are not valid," reminded Senior Economist Rebecca Braeu. "In the first part of July 2009, consumers stood by, anticipating the Cash for Clunkers program, and then later in the month they rushed to dealerships to take advantage. These were not typical patterns."