J.D. Power and Associates raised its forecast for 2010 U.S. light-vehicles sales to 11.8 million from 11.7 million based on stronger fleet sales, it said on Thursday.
Positive first-quarter GDP growth and favorable employment numbers suggest that the economy is performing slightly ahead of expectations, J.D. Power said. In addition, robust product activity is expected to drive consumers into showrooms, and fleet volume is being replenished from the low levels of 2009.
Total U.S. light-vehicle sales for May will be 11.3 million units on a seasonally adjusted annualized rate (SAAR), up from 9.8 million in May 2009, J.D. Power forecast.
However, less spending on buyer incentives from automakers will cause May retail sales -- those mainly to individual consumers -- to fall to 9.2 million vehicles on a SAAR basis compared with 9.6 million in April, the analysis and research group based in Southern California said.
Fleet sales -- mainly to government agencies and companies -- will rise to 205,000 new vehicles, up 52 percent from last May, J.D. Power said.
U.S. light-vehicle production for 2010 was forecast at 11.2 million cars and trucks, an increase of 32 percent from 2009.
Automakers in March boosted incentives to match those instituted by global industry leader Toyota Motor Corp <7203.T>, which was reacting to a sales dip caused by safety recalls and suspension of sales of some of its top-selling cars. Toyota has not said whether the level of its incentives will remain into summer.
Compared with April, incentives this month are flat at $2,800 (per vehicle), which is contributing to the slower sales pace, said Jeff Schuster, executive director of global forecasting at J.D. Power.
However, with the unofficial start to summer approaching, consumers are more inclined to consider purchasing a new vehicle, and it's likely that Memorial Day (weekend) sales incentives will generate an even stronger close for May, he said.
Memorial Day is observed on Monday, May 31.
The J.D. Power sales forecast for the full year is consistent with an industry consensus for a slow, steady recovery from the recession. After sales rates of more than 16 million from 1999-2007, U.S. auto sales fell to 13.2 million in 2008 and 10.4 million in 2009.
(Reporting by Bernie Woodall, editing by Maureen Bavdek)