New vehicle retail sales in the US in March are showing signs of improvement, following slower-than-expected sales in the first two months of 2014, according to a monthly sales forecast developed jointly by JD Power and LMC Automotive.

The two companies say that US new light vehicle retail sales are expected to reach 1.19m units in March – a 7% gain on last year – with the seasonally adjusted annualised rate (SAAR) for retail sales projected to reach 12.6m.

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Retail sales in February reached 946,766 with a SAAR of 12.4m.

“The severe weather had an impact on retail sales in January and February, but as the weather has improved, so have sales,” said John Humphrey, senior vice president of the global automotive practice at JD Power. “Additionally, stronger pricing coupled with lower reliance on fleet continues to bode well for the overall health of the sector.”

Total light vehicle sales in March 2014 are forecast to rise 6% to nearly 1.5m units. The total market SAAR for the month is forecast at 15.8m units.

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Low fleet mix combined with a weather impacted sales pace in January and February has led to a slight downward revision in the outlook for 2014. LMC Automotive has cut its forecast for total light vehicle sales in 2014 to 16.1m units from 16.2m. The retail light vehicle sales forecast remains 13.3m units.

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“The selling pace for the year was slow out of the gate, but the industry remains poised for stable growth in the near- to mid-term,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “Modest improvements are expected as 2014 progresses, the recovery from the deep recession nears an end and the market transitions to a post-recovery stage.”

North American Production

North American vehicle output in February 2014 finished at 1.4m units, a 4% increase from February 2013. Inventory levels on a days’ supply basis are still hovering at nearly 80 days, which is 20 days higher than ideal levels. LMC Automotive expects a faster selling rate to continue to pull down inventory levels, ending the quarter on a positive note.

“In spite of flat January numbers and higher-than-normal inventory levels, output for the first quarter is expected to exceed 4 million units and to top first quarter 2013 levels by 3 percent,” said Bill Rinna, senior manager of forecasting at LMC Automotive. “Although demand is starting to pick up, production growth is also being helped by new models, most notably the Jeep Cherokee, Nissan Rogue, and the Nissan Versa Note.”

LMC Automotive’s North American production forecast for 2014 remains 16.5m units, with US volume of 11.1m units, a 3% increase over 2013. Production in Mexico is expected to increase 7% to 3.1m units, while Canada volume is expected to drop nearly 5%, to 2.3m units.