JD Power says May auto sales "dismal"

Reuters

DETROIT (Reuters) - May auto sales are off to a "dismal start" as high gasoline prices, lower sales incentives and thinner inventories are curbing consumer purchases, J.D. Power and Associates said on Thursday.

The lower inventories due to the aftermath of the Japan earthquake and auto parts supplier problems have meant some vehicles are not readily available. This in turn has allowed dealers and automakers to further cut incentive spending, which results in higher outright vehicle prices.

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And, J.D. Power indicated, consumers are wary of spending during a sharp uptick in gasoline prices. Federal government statistics show the average price of U.S. gasoline this week was $3.96 per gallon, $1.10 higher than a year ago.

North American production will be cut by about 400,000 vehicles in the short term, making for thinner inventories that allow dealers and automakers to cut back on consumer incentives that include low-interest financing and price discounts.

J.D. Power said it expected U.S. sales of 11.9 million light vehicles in May at the seasonally adjusted annualized rate that the auto industry uses to gauge its performance. That would be down from 13.2 million on an annualized basis for April, but 6 percent higher than May 2010.

J.D. Power maintained its full-year outlook for U.S. auto sales at 13 million vehicles, but lowered its 2011 retail sales forecast to 10.6 million units from 10.7 million.

It said the May retail sales annualized rate would be near 9.6 million units, down from 11 million in April, but up 10 percent from May 2010.

Retail sales do not count fleet sales, which are included in the total light vehicle sales figures. Fleet sales are bulk sales to daily rental agencies, government and businesses.

J.D. Power said that in the second half of 2011, the U.S. auto industry recovery from the 2008-2009 downturn will resume the pace seen in the early part of this year before the March 11 earthquake in Japan.

(Reporting by Bernie Woodall; Editing by Lisa Von Ahn)

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