Analysts: Fleet Sales Mask Low Demand

Fleet sales are expected to once again prop up June car and truck sales when figures are released Thursday, masking weak demand among retail customers, reported The Detroit News.

Industry analysts believe June sales will outpace June 2009 as businesses and governments replenish their aging motor pools after delaying purchases amid the recession.

But overall sales are expected to fall from May, due to a volatile financial market and wary consumers.

Jeff Schuster, executive director of global forecasting at J.D. Power and Associates, predicts this month's sales will total 971,000 cars and light trucks, up 13 percent from a dismal year-ago pace. That was the month that General Motors Corp. filed bankruptcy, and the auto industry was struggling with historically low sales.

"With the recovery not progressing as expected, it's gut-check time for the automotive industry," he said.

Schuster forecasts June's selling pace dipped to 10.9 million vehicles on an annualized basis, down from 11.5 million in May but up from 9.7 million a year ago.

Pricing firm TrueCar.com expects the seasonally adjusted annualized rate (SAAR) of sales will total 11.1 million vehicles. TrueCar.com forecasts June sales at 985,266, up 14.8 percent from a year earlier but down 10.5 percent from May. Edmunds.com, meanwhile, forecasts an 11.2 million SAAR and a 16.6 percent increase in June sales.

The boost from moribund 2009 levels is largely attributed to fleet orders by rental car companies, but that demand is expected to ebb later this year, putting increased importance on a resurgence in consumer demand.

Yet all automakers are better-positioned this year to benefit from a slow recovery in retail orders after cutting costs last year and, in the cases of GM and Chrysler Group LLC, receiving tens of billions in federal aid, according to a new report from Standard and Poor's.

Fleet sales are serving an important purpose for GM, in particular, which is loading rental cars with more options like DVD players and navigation systems, which are helping fetch higher prices and boosting resale values.