The US light vehicle market is heading for another strong month in March and is on track to exceed 15m units this year.
JD Power said that new vehicle sales remain strong in March, as both the light vehicle retail selling rate and the total light vehicle rate are consistent with February’s performance at 12.1m units and 15.3m units, respectively, according to its projections made with LMC Automotive.
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Total light vehicle sales in March 2013 are projected by JD Power/LMC to reach 1,465,100 units, an 8% increase from March 2012, with a selling rate that is consistent with the expected performance for the year. Fleet share is expected to hold at 21%.
LMC Automotive is holding its 2013 US forecast for total light vehicle sales at 15.3m units and the retail light vehicle forecast at 12.5m units.
“Building on the current performance, we expect the economic environment to improve throughout 2013, as the likelihood of a dark cloud slowing the recovery pace diminishes,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “Consumers do not appear phased by headwinds from Washington, as growth in auto sales are outperforming earlier expectations.”
Projections by Kelley Blue Book are in line with JD Power/LMC’s assessment. KBB says that new vehicle sales will remain steady at a 15.2m seasonally adjusted annual rate (SAAR) in March.
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By GlobalData“Sales will be boosted by record low interest rates and a slowly improving job market, which recently saw the unemployment rate and new unemployment claims fall to five-year lows,” said Alec Gutierrez, senior market analyst of automotive insights for Kelley Blue Book. “In addition, with attractive financing and ample inventory to choose from, many people receiving tax refunds will use their returns toward a down payment on a new vehicle this month.”
At the manufacturer level, Kelley Blue Book expects year-over-year gains in March to be modest, due in part to one fewer selling day this year. However, Volkswagen and Honda will lead the way with expected gains of 9.6 and 8.7 percent, respectively, it says.
JD Power also said that the average new vehicle customer-facing retail transaction price (US$28,504) is up 3% from March 2012.
In addition, the percentage of retail sales with a 72-month or longer loan is at record levels, reaching 32.1% in March 2013, an increase from 30.4% in March 2012.
“While longer loan terms have traditionally been a cause for concern to the industry due to the risk of purchase cycle extension, it is not necessarily as daunting as it may seem.” said John Humphrey, senior vice president of the global automotive practice at JD Power. “The longer loans are being offset by more leasing and the low interest environment, which means that consumers are able to put more of their monthly payment towards their loan principal rather than interest fees.”
North American vehicle production up 3%
LMC said that vehicle production in North America is up three percent through February 2013, compared with the same period in 2012. Production of models in the compact segment is outpacing the total market, up seven percent thus far in 2013. Production of vehicles in the midsize and large segments has increased 1% and likely will hold in a slower growth position as General Motors readies the ramp-up of its redesigned large pickups. Production of compact cars and compact premium CUVs is up 15% in the first two months of 2013, driven by the addition of the Dodge Dart, Nissan Leaf and the redesigned Acura RDX.
Vehicle inventory levels in early March increased to a 64-day supply, compared with 74 days in February. Overall, there are nearly 3.2 million units currently available on dealer lots or in transit—an increase of approximately 600,000 units from March 2012. Both car and truck inventories have dropped approximately 10 days from last month. Cars began March with a 61-day supply and trucks with a 68-day supply.
LMC Automotive’s forecast for North American production remains at 15.9m units for 2013, an increase of three percent from 2012.
“While there is a significant amount of activity below the topline production in 2013 -from more than 50 new-model ramp-ups to reduced exports to Europe – the underlying trend remains positive and on target for 2013 to improve from 2012,” said Schuster.
