LMC Automotive has raised its forecast for US light vehicle sales from 14.3m to 14.5m in 2012. The upward revision has been prompted by recent strong sales.

LMC's North American vehicle production forecast for 2012 has also been revised up from 14.3m units to 14.9m units.

The automotive forecasting company also says that the PA-12 resin risk caused by a plant explosion in Germany in March is 'now relatively low'.
“Another healthy retail selling pace in May, combined with a fleet mix of more than 20%, is driving the further improvement in the 2012 outlook for US light-vehicle sales,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “There is little question that this market currently has momentum, but it also is benefiting from the stability in the economic and macro fundamentals required to sustain a higher selling rate throughout the remainder of the year.”
May new-vehicle retail sales are projected to come in at 1,087,000 units, which represents a seasonally adjusted annualised rate (SAAR) of 11.6m units. Volume is expected to increase 20% compared with May 2011, after adjusting for the two additional selling days this month.
“This is the largest year-over-year gain since February 2011, when sales increased 27%, compared with February 2010,” said John Humphrey, senior vice president of global automotive operations at JD Power and Associates. “The fact that we continue to see strong month-over-month results in retail sales points to the underlying strength of the recovery for the industry going forward. In light of the actions that many automakers took to lower their cost base during the recent downturn, this continued increase in volume certainly bodes well for sector profitability in the near term.”
Total light vehicle sales in May are projected to come in at 1,384,000 units, which is a 21% increase from May 2011. Fleet volume as a percentage of total light vehicle volume is expected to remain high in May, representing 22% of total sales.
North American vehicle production prospects
Vehicle production in North America is continuing to benefit from higher sales this year. LMC says that North American light vehicle production through April this year is up nearly 22% on last year as nearly 1m additional vehicles were built in the first four months of 2012 than in the same period last year. Growth in US manufacturing leads the overall North America region with a 25% year-to-date increase. Production in Mexico is up 19% and Canadian manufacturing is 14% higher. North American production in the second quarter is anticipated by LMC to increase by more than 20% from 2011, with more than 3.8m units expected to be built. 

LMC notes that several manufacturers have limited normal summer shutdowns this year in order to keep pace with vehicle demand and stabilise inventory throughout the summer selling season.
LMC estimates that vehicle inventory at the beginning of May remains stable at a 55-days supply, a slight increase from a 54-days supply in April. Car inventory remains at a below-normal level, with a 45-days supply in early May, up from 44 days in April, as demand for cars has increased due to higher fuel prices. Truck inventory levels are also stable in May at a 67-days supply, up from a 66-days supply in April.
The robust sales pace continues to drive a stronger outlook for North American production, LMC says. As a result, LMC Automotive has increased the North American production outlook for 2012 to 14.9m units (up from 14.3m units), which represents 14% growth from 13.1m units built in 2011.
“With the increase in demand and more pronounced production recovery with the Japanese manufacturers, North American production volume for the remainder of 2012 is expected to be vigorous,” said Schuster. “Risk of volume loss related the PA-12 resin issue appears to have been abated, therefore no longer constraining further growth in production volume.”