July 2011 U.S. Auto Sales Shows Recovery
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DETROIT Jul 28, 2011; Clare Baldwin writing for Reuters reported that July auto sales should show an improvement from the past two months as the industry recovers from supply chain disruptions in Japan, but it could be a long time before the industry is fully back on track.
A March earthquake, tsunami and nuclear crisis in Japan disrupted the supply of key auto parts and forced automakers to idle plants and cut output. That resulted in fewer incentives and higher prices for consumers, who failed to buy as many cars in May and June as economists predicted.
Two years after the end of the U.S. recession that saw GM and Chrysler Group LLC seek bankruptcy protection and government bailouts, the economy remains in turmoil. Unemployment is above 9 percent, manufacturing output stalled in June and U.S. consumer confidence hit a near 2-1/2 year low earlier this month.
Now, as Japanese factories come back online and inventories recover, executives and analysts said that will change, albeit slowly.
"We think we're probably going to be into late August, early September before we get back on trend," General Motors Co's (GM.N) U.S. sales chief Don Johnson said in an interview last week.
Auto sales are an early indicator each month of U.S. consumer demand. The final tally for U.S. sales in July is scheduled to be reported on August 2. GM is also due to report second-quarter earnings on August 4.
July sales, expected to hit an annual rate of about 12 million vehicles, should mark the beginning of a recovery from a bottom in June, they said. That is still less than the 13 million-plus pace from earlier in the year.
Consumer confidence is being hit by uncertainty over the government's ability to meet its debt obligations, Johnson said. While he expects a last-minute debt deal, he said the uncertainty is bad for business.
GM and rival Ford Motor Co have forecast sales for the year at the low end of 13 million to 13.5 million vehicles. That includes medium and heavy trucks that make up about 300,000 vehicles.
Additional reporting for Reuters by Ben Klayman and Deepa Seetharaman; Editing by Richard Chang