June Sales Pacing Down from May

The Memorial Day weekend sales were disappointing, which resulted in a drop in the sales pacing for the last week of the month. This lower pacing has continued into June. So far, sales are tracking to end the month with retail sales of 993,000, which works out to a SAAR of 10.9m. (This compares with around 1.086m, or a SAAR of 11.2m last month.) If we assume a fleet sales mix that is about the same as last month's 18.5%, then June will have total sales of around 1.219m and a SAAR of 13.4m. This is down from 1.334m units sold and a SAAR of 13.8m last month.

A few points worth noting:

• The sales pacing is obviously slowing as the year progresses. Our modeling assumes this will continue through the summer with a slight upturn toward the end of the year. There are obviously many things that can happen in that timeframe, not the least of which is a general economic slowdown that is greater than we expect. The point is that so far the slowing in sales is not a major concern.
• The media continues to focus on year-over-year comps. These will present an overly rosy picture; sales last June were held back by supply shortages and higher prices. Both were triggered by the Japanese earthquake and tsunami.
• Most manufacturers have incentive programs that expire on July 2nd. Many of these programs are stair step plans that, while controversial, do goose sales. We expect many of these sales will be reported as June sales, so there is a chance the pacing will pick up during the next week. On the other hand, as I noted, consumer response to Memorial Day weekend sales was tepid, so consumers do seem to be turning more cautious. We'll have a better read on this when we release our official forecast next week.

Looking at retail share compared to the same period last month, it's all relatively stable. The exception is Volkswagen who is up about 9%. Here are the details: