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STRATEGY

Auto Sales Bolster Overall Retail
 

Retail sales were on the rise for the second consecutive month in June, as a result of climbing automotive and gasoline sales.
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Although department store and restaurant sales continue to wilt, automotive and gasoline station purchases are enough to account for a slight uptick in overall monthly retail sales, census numbers show.

In June, auto parts and vehicle sales climbed 2.3 and 2.6 percent, respectively, from the month before. Gas station sales rose 5 percent in June after increasing by the same amount in May. Total retail sales climbed just .6 percent, dragged down in part by general merchandise such as department and warehouse stores, which fell .4 percent from the month before.

Amid mostly negative news for the auto industry, this is a relative bright spot says Jack Plunkett, CEO of Plunkett Research, an industry research firm; relative being the key word. "It's going to continue to be a very difficult environment, he says."

Gasoline sales can rise and fall fairly significantly with a few pennies' increase or decrease in the price of a gallon, but auto sales can be more telling of the economic climate.

Plunkett says the time of year might be what has spurred sales more than anything else. With a new model year due out soon, dealers are more prone to making deals, he says.

For dealerships that have been forced to close their doors, they're also being pressured to make room for the next tenant. "The dealerships that are closing have been under a deadline to eliminate inventory," Plunkett says.

So while the initial reading of climbing sales might look good, Plunkett advises to stay wary of the broader ailing marketplace. "We're going to have bad back-to-school business," he says, "and a lousy Christmas."

Last updated: Jul 22, 2009




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