US: Light vehicle market rebounding in November
The US light vehicle market is bouncing back in November following the negative impact caused by Hurricane Sandy at the end of October, according to data released by JD Power and LMC Automotive.
Retail sales have picked up strongly this month and are projected to come in at 931,900 units, which represent a seasonally adjusted annualised rate (SAAR) of 12.9m units. November is expected to reflect the highest retail selling rate since January 2008.
"Sales have strengthened each week in November, which bodes well for a strong finish to the month and the year," said John Humphrey, senior vice president of global automotive operations at JD Power and Associates. "We expect healthy sales in December, as the industry continues to recover from Sandy and leads into its year-end sales events."
Total light vehicle sales in November are forecast to show year-on-year growth of 12% with volume at 1,113,500 units. Fleet sales are expected to hold steady below a 17% share of total sales, which is the same level as October but lower than the 18 percent share last November.
LMC Automotive is maintaining the 2012 forecast for total light vehicle sales in the US at 14.4m units and the forecast for retail sales at 11.7m units. LMC said that while the forecast still rounds to the same numbers as it did in October, the overall outlook is more favourable.
The forecast for 2013 remains at 15m units for the total light vehicle market (12.2m units for retail sales). The 2013 forecast is consistent with others and represents a slower growth rate of 4% from 2012. There continues to be the possibility of accelerating the growth in 2013, as the current level of uncertainty is expected to be reduced in the first half of the year.
"The irrepressible need and willingness of consumers to replace ageing vehicles is stronger than the effects of natural disasters and fiscal turmoil both here and abroad," said Jeff Schuster, senior vice president of forecasting at LMC Automotive. "A sustained recovery pace in auto sales is expected over the next six months, barring any fiscal cliff hangover, but the medium-term forecast is still dependent on more pronounced economic activity and growth."
North American production upswing to slow in 2013
North American light vehicle production volume remains up 20% through the first 10 months of 2012, compared with the same period in 2011. Volume through October is at nearly 13.1m units, the same volume level as in all of 2011.
Vehicle inventory in early November rose to a 71-day supply – the highest day supply level in 2012 – compared with 59 days in October. The supply growth is a result of an increase in inventory ahead of anticipated year-end sales, as well as the impact of Hurricane Sandy, which caused significant damage along the US East Coast and slowed demand in the last week of October. Car inventory has risen to a 66-day supply from 51 days in October, while truck inventory has increased to a 77-day supply from 65 days.
The forecasters say that vehicle inventory levels should stabilise this month and into December, as sales are expected to recover due to consumers who had delayed their purchases last month returning to the marketplace following the storm and from additional sales due to the need to replace damaged vehicles.
LMC Automotive's 2012 North American production forecast stands at 15.3m units, which is a 17% increase from 2011. However, a slowdown is forecast for 2013. The North American production forecast for 2013 is expected to be nearly 15.8m units, just 2% up on 2012, but “with further upside potential”.
"The continued pace of demand in North America, with sales up 13% through October, is supporting the short-term production plan and volume at the highest level since 2005," said Schuster. "Production levels continue to be managed to demand, so a growing level of inventory is not setting off any alarms, as some inventory building is normal as a year closes."
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