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Slowing in Market Deterioration Indicated by July New-Vehicle Retail Sales

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RISMEDIA, July 25, 2009- Although new-vehicle retail sales in July are projected to decrease 19% from July 2008, this marks an improvement in year-over-year declines observed for the first half of 2009, according to J.D. Power and Associates, which gathers real-time transaction data from more than 10,000 dealerships across the United States. Sales for the first half of 2009 are down 32% from the same period in 2008.

Based on the first 15 selling days of the month, new-vehicle retail sales for the month of July are expected to come in at 780,500 units, which represent a seasonally adjusted annualized rate (SAAR) of 8.2 million units. While July’s selling rate is down by 4% compared with June, this pace remains consistent with the first half of 2009.

Although July retail sales have declined compared with June, fleet sales have improved slightly after several months of weakness and production cuts. As a result, the July SAAR for total vehicle sales increases to 10 million units.

“Retail sales for 2009 are expected to be only incrementally affected by the Cash for Clunkers program, as many consumers don’t understand the specifics of the program, and if they do, they often find they don’t qualify for the incentive,” said Gary Dilts, senior vice president of global automotive operations at J.D. Power and Associates. “However, there is potential for increased sales in the short term as a result of select OEMs boosting incentives to match the program.”

To date in July, the Cash for Clunkers program appears to be affecting segment mix, particularly in an environment with gas prices pulling back from recent increases in June. Retail market share for compact vehicles has increased to 39%, up approximately 2.5 percentage points from June. The shares for midsize and large vehicles have decreased, with the exception of large pickups, which are up by 0.5 percentage point. This increase in large-pickup share can be attributed to the improved fuel economy of today’s pickups, compared with those being traded in.

J.D. Power and Associates is maintaining its forecasts for 2009 at 8.3 million units for retail sales and 10.0 million units for total sales. The current sales trend suggests the likelihood of a flattened recovery in the second half of the year.

“Given a sputtering but improving economy, the Cash for Clunkers program and manufacturer incentives, it appears that consumers are taking a wait-and-see approach,” said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. “Favorable responses from consumers to these factors will be critical to market recovery in the second half of 2009.”

For more information, visit www.jdpower.com.

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