New Car Sales Gains Lower in Second Quarter But Some Mitigating Factors

New retail vehicle registrations increased 19.8 percent in California during the first half of 2011, compared with the first half of 2010, the California New Car Dealers Association announced July 21 that

Although California’s new car dealers report more buyers compared with last year, second quarter sales dramatically slowed due to vehicle inventory shortages resulting from the Japanese earthquake and the anticipated lowering of the state sales tax rate by 1 percent on July 1.

“Just when we thought we were out of the woods from the recession, the Japanese earthquake and tsunami threw us another curveball.  Once Japanese auto manufacturers and part suppliers ramp up production, the second half of the year should be very good”, said Steve Snyder, chair of the dealers association who operates Gold Rush Chevrolet-Subaru in Auburn.

Second Quarter new vehicle registrations increased 4.9 percent this year versus a year earlier – almost 15 percent lower than the 19.7 percent year-over-year increase in the First Quarter.

Recovering inventories and pent up demand, resulting from the sales slump between 2008 and 2010, should help the market during the second half of the year.

At the same time, a sluggish economic recovery and moribund labor market should prevent a sharp rebound.

Other key trends in the state market:

• European and Korean brand market shares each increased 1.8 percentage points in the first six months of this year.

•Passenger car share declined 1.5 share points in the first half.

• Honda Civic was the best-selling vehicle in the California new retail market.

• Increased production following the Japanese earthquake and tsunami should give a boost to Japanese brand sales in the second half of this year.

Here’s the full report.

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