The December new vehicle retail sales pace is significantly beating expectations, driving a strong close to a challenging year of recovery, according to JD Power and Associates, which said sales are expected to come in at 936,300 units, which represents a seasonally adjusted annualised rate (SAAR) of 10.8m units.

"December retail sales are expected to be up 19% from one year ago. Retail transactions are the most accurate measurement of true underlying consumer demand for new vehicles," the data gatherer said.

 “Even with the possibility that sales in the third week of December may be affected by the recent winter storms, the strength in sales during the second week is expected to continue through the rest of the month,” said forecasting chief Jeff Schuster. “As a result, it appears that 2010 will end on a high note.”

Total light-vehicle sales for December are expected to come in at 1,133,000 units, which is 14% higher than December 2009. Fleet sales are projected to decrease in December, with volume expected below 200,000 units - down 3% from December 2009. Fleet share of total sales in December is expected to be at 17%, the lowest level all year.

Given a stronger than expected retail performance in December, JDP has increased its retail sales forecast for the year to 9.2m units (from 9.1m units). The forecast for total light-vehicle sales in 2010 has also been adjusted to round up to 11.6m units (from 11.5m units)

“The continuation of the strong performance in the retail market through December may be the confirmation, that the industry has been looking for, that the recovery has been re-engaged,” said Schuster. “The likelihood of an extension of the tax cuts, in addition to a strong close in 2010, bodes well for the automotive market in 2011.”

For 2011, JDP’s forecast remains at 10.4m units for retail sales and 12.8m units for total sales.

November. With December projected at 800,000 units, 2010 production is expected to end at 11.8m units - up 38% from 8.5m units in 2009.

Of the three countries comprising North America, Mexico is expected to post the strongest year-over-year increase, with production up nearly 50% to 2.2m units. Mexico is benefiting from a strong increase in truck production from the Detroit Three, as well as the addition of the Ford Fiesta. Canadian production is expected to be up 39% to 2.1m units, while volume in the US is projected to be up 35% to 7.6m units.

Vehicle inventory at the beginning of December was steady, compared with November, at 67 days supply. In comparison, the days supply is up 5 days from the level at the beginning of December 2009 (62 days). Currently, car inventory is outpacing truck inventory at a 71-day supply, compared with a 64-day supply.

The outlook for production in North American in 2011 has been increased slightly to 12.7m units (from 12.6m units), which is 8% higher than in 2010.