Analysts Expect Auto Sales to Stay Strong in September

AP

DETROIT (AP) – Whether it's out of necessity or desire, Americans continued to buy cars and trucks at a strong pace in September, according to industry analysts.

Data from dealerships across the nation show that new vehicle sales should hit an annual rate of 14.5 million vehicles for the month, continuing a rebound that began in June, according to J.D. Power and Associates and LMC Automotive.

Citi Investment Research also is forecasting a strong month, in the low- to mid-14 million range. Sales should be up 11 percent over September of last year as autos continued to be a bright spot in an otherwise confused and sputtering economy, according to LMC.

Much of the increase is driven by pent-up demand as people continue to replace aging cars and trucks that they've been driving since the Great Recession. The average age of a vehicle in the U.S. is approaching 11 years.

"Consumer willingness or need to overlook the economic uncertainty is the driving force behind the recent strength in light-vehicle sales," said Jeff Schuster, LMC's senior vice president of forecasting.

Pickup truck demand is helping to drive the sales, with September building on momentum from a strong August, Itay Michaeli, an industry analyst for Citi, wrote in a note to investors on Monday. Pickup truck sales always jump in the fall as drivers get ready for winter with four-wheel-drive vehicles in snowy states. But the increase also is coming from purchases by small businesses, fueled by a recovering housing market. Analysts say there's a direct correlation between stronger home building and pickup truck sales.

U.S. builders broke ground on 2.3 percent more homes and apartments in August than July, the best rate of single-family home construction since April 2010.

But there's bad economic news to counteract the good. Manufacturing activity has weakened, and the leading index of economic indicators dropped slightly in August. Hiring is still languishing and unemployment remains at 8.1 percent.

Yet LMC and J.D. Power are predicting that retail sales to individuals will be 12 percent higher than September of 2011, an indicator of a healthy auto sales market. The companies say subcompact, compact and midsize car retail sales should be up 25 percent or more in September.

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