The new-vehicle retail selling rate in February remains above 12m units – stronger than it was a year ago – as the auto industry recovery continues, according to J D Power and Associates and LMC Automotive.
February new vehicle retail sales are expected to come in at 931,100 vehicles, which represents a seasonally adjusted annualised rate (SAAR) of 12.1m units, a decline from the robust 13.1m SAAR in January, but stronger than the 11.7m SAAR in February 2012. Retail transactions are the most accurate measurement of true underlying consumer demand for new vehicles.
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“All signs of the industry’s health are positive right now,” said JDP’s John Humphrey. “Average transaction prices are up, incentives are stable, leasing is at a healthy level and newly redesigned models continue to make an impact on the marketplace.”
“Demand is increasing, but the automakers deserve credit for doing a much better job of keeping alignment of production and demand.” said Humphrey. “This has led to new-vehicle transaction prices that are averaging nearly US$1,000 more in February than the same period in 2012 while incentives have remained relatively flat year over year.”
Total light-vehicle sales in February 2013 are projected to reach 1,176,200 units, a 7% increase from February 2012 and the fourth consecutive month with the selling rate at or above 15.2m units. Fleet share is expected to remain at the January level of 21%.
The outlook for 2013 continues to improve, as the selling pace remains robust. LMC Automotive is increasing its 2013 US forecast for total light-vehicle sales to 15.3m units from 15.1m units. The increase is split between fleet and retail light-vehicle sales, with the outlook for retail increasing to 12.5m units from 12.4m units.
“The current fundamentals that are driving strong vehicle sales – pent-up vehicle demand and a stable, recovering economy–are expected to get a boost by additional positive factors this year,” said LMC’s Jeff Schuster. “An expected recovery in the housing market, and 50% more new-model launches combined with an increase in lease maturities should keep light-vehicle sales climbing throughout the year.”
North American light-vehicle production in January 2013 finished at more than 1.3m units, 7% higher than in January 2012. Production in Mexico has increased by nearly 21% from January 2012 on higher General Motors, Ford, and Volkswagen volumes related to newer launches. US vehicle production has grown by 9% from January 2012, while Canadian production has declined by 13% during the same period.
Vehicle inventory levels in early February increased to a 74-day supply, compared with 59 days in January. A higher level is typical in February. However, at the current selling rate, inventory levels are expected to rebalance within the next month or two. Overall, there are nearly 3.1m units currently available on dealer lots or in transit – an increase of approximately 600,000 units from February 2012.
LMC Automotive’s forecast for North American production remains at 15.9m units for this year, a 3% increase from 2012.
“The current inventory situation and production plan for 2013 suggests that there is enough volume to support the expected increased level of demand, and there remains little risk for an overbuild environment,” said Schuster.
