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US auto sales seen losing momentum in Jan

Updated: 2011-02-01 09:53


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DETROIT - US auto sales lost momentum in the final weeks of January, auto executives and a leading analyst cautioned on Monday, setting the stage for a softer start to 2011 than the industry had expected.

J.D. Power, which gathers sales data from almost 9,000 US car dealerships, issued an unusual update to its monthly sales forecast on the eve of the Tuesday sales report, cautioning that consumers had pulled back from purchases ahead of the crucial end of the month.

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Both Ford Motor Co (F.N) and Chrysler Group LLC also suggested industry-wide sales could fall short of the most bullish forecasts.

US auto sales represent one of the first snapshots of consumer demand. A result at the low end of expectations could raise new caution at a time when some analysts have tamped down bullish expectations for the speed of the earnings growth for US automakers and suppliers in 2011.

"The strength of retail sales from the beginning of the month has reversed during the past two weeks," said Jeff Schuster, J.D. Power's chief forecaster.

Schuster said the sudden slowdown in sales in January could reflect both the impact in winter storms and the absence of new sales incentives from major automakers. Those kinds of discounts, including cash-back offers, were down 12 percent in January from December, he said.

J.D. Power forecast a January sales rate of between 11.5 million and 12 million vehicles, down sharply from the outlook for 12.2 million it had given just 10 days before.

Automakers are set to report January US auto sales on Tuesday.

Economists surveyed by Reuters had forecast sales for the month of about 12.5 million vehicles on the annualized and seasonally adjusted basis tracked by the industry.

That would be slightly higher than the 12.4 million sales rate that the industry averaged in the fourth quarter. It would also represent the best January sales result since 2008.

Of the 14 analysts surveyed by Reuters, forecasts ranged from a low of 12.1 million to a high of 13 million.


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