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J.D. Power Reduces Forecast for 2012 Auto Sales

Posted: 10/24/2011 - 12:22 PM ET

Automotive News is reporting this week that auto-industry analysts J.D. Power and Associates has reduced its expectations for 2012 auto sales in the United States by about two percent, citing the possibility of an even deeper recession. Even with the lower forecast however, the overall expectation is that 2012 sales will be slightly higher than 2011.

A key component of this prediction is light vehicle sales. J.D. Power expects them to increase by 12 percent, to 14.1 million next year, an increase over the 2011 forecast of 12.6 million units. Numbers through September, 2011, show that that sales of these vehicles are already up by 10 percent.

Speaking on behalf of J.D. Power, executive director of global forecasting Jeff Schuster explained that there was an increased risk of forty percent that there would be a 'double dip' recession, which is what caused the decrease in the 2012 forecast. Until recently the company was using the low 30 percent range as their risk assessment.

Schuster also said that the status of employment across the nation will be the triggering factor for another recession, since the unemployment level is what drives consumer spending, consumer confidence, and demand for new vehicles. He added that there's little likelihood of the employment rate, currently 9.1 percent, changing for the better in 2012.

It is this combination of factors, J.D. Power said, that will cause a negative impact on 2012 auto sales, to the tune of 200,000 to 300,000 units. Nevertheless, Schuster was quick to assure, in a recent report issued by his firm, that a complete halt in growth is unlikely.

Other sources have slightly different outlooks on next year's numbers. Last week, Dan Akerson, CEO of General Motors, said in an interview that he expected industry sales to remain 'flattish' over the next year.

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