US light vehicle sales are coming in strong in March according to data sources LMC/JD Power and the Kelly Blue Book.
LMC/JD Power says that new vehicle retail sales are on track to end the first quarter of 2012 particularly strong, with performance in March continuing the trend from the past several months.
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LMC/JD Power estimates that total light vehicle sales in March will come in at 1,372,400 units, which is a 6 percent increase from March 2011. In addition to the strong retail performance, fleet mix has been higher than normal for the first two months of the quarter, with January and February averaging 24 percent. March is expected to finish slightly lower at 21 percent of total sales.
Kelley Blue Book projects overall new vehicle sales to reach 1,425,000 units, or 14.6 million seasonally adjusted sales rate (SAAR), in March 2012. That would be a 24 percent gain from last month and a 14 percent gain from March 2011.
At more than 1.4 million units, KBB says that sales will be the highest for any March since 2007, when industry sales topped 1.5 million units overall. March traditionally is a strong month as consumers cash-in their tax returns and head to dealerships for the latest model-year vehicles. Kelley Blue Book expects this March will be especially strong due to high consumer demand for fuel-efficient models and interest in popular redesigns such as the Toyota Camry, along with improving supply conditions and attractive finance opportunities.
The optimism is echoed by JD Power/LMC.
“Each month of strong sales brings with it increased optimism that the pace of growth represents a true recovery for the sector,” said John Humphrey, senior vice president of global automotive operations at JD Power and Associates. “Barring any future shock related to geopolitical issues in the Gulf region and further upward pressure on the price of oil, we believe sales will continue on a solid pace for the balance of the year.”
Through the first 18 days of March, sub-compact and compact cars accounted for approximately 23 percent of retail sales in the United States, the highest level since the CARS program was implemented in 2009, according to LMC/JD Power. Combined, sub-compact and compact cars were on dealer lots an average of 42 days before being sold, compared with 48 days industry average and turn rates substantially lower than in 2011 – 17 fewer days for sub-compact cars and 46 fewer days for compact cars.
LMC/JD Power says that total light vehicle sales in March are expected to come in at 1,372,400 units, which is a 6 percent increase from March 2011. In addition to the strong retail performance, fleet mix has been higher than normal for the first two months of the quarter, with January and February averaging 24 percent. March is expected to finish slightly lower at 21 percent of total sales.
LMC/JD Power says that the 2012 outlook for vehicle sales remains positive, as the first quarter selling rate is expected to come in at 11.6 million units for retail and 14.4 million units for total light vehicles. This sales tempo is ahead of the forecast for the full year of 11.4 million units for retail light-vehicles and 14.1 million units for total light vehicles.
“The first quarter selling rate has outperformed the annual forecast for sales for the first time since 2008, when the automotive market started to decline,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “The vigorous start to 2012 suggests that there is further upside potential if the current pace continues through the summer months.”
Continuing the current trend, small car sales (sub-compact and compact segments) are expected to remain strong throughout 2012, with combined segment share at nearly 20 percent of total light vehicles.
“Small car mix is benefiting from higher gas prices and new models entering the segment, with 41 small car models in the market in 2012, compared with just 30 back in 2007,” said Schuster. “Overall share of small cars in 2012 is expected to climb to its highest level ever, at nearly 20 percent of total light-vehicle sales.”
North American production
LMC says that North American light vehicle production through February is up nearly 23 percent, compared with the same period in 2011. BMW leads the European manufacturers in year-to-date production volume increases, up 42 percent due to higher production of the X3. The Japanese OEM production volume continues in recovery mode, with volume up 26 percent YTD February from YTD February 2011. The Detroit 3 had approximately a 20 percent year-over-year increase in production volume. Production levels are expected remain at a higher level in the first quarter of 2012, with volume forecasted at 3.8 million units, up almost 15 percent from the first quarter of 2011. Looking ahead to second quarter production, an increase of 18% from last year is expected by LMC, with nearly 3.7 million units to be built (last year’s second quarter was affected by the Japan earthquake supply disruptions).
Vehicle inventory declined to a 57-day supply at the beginning of March, compared with a 66-day supply at the beginning of February. Car inventory is at below-normal levels with a 48-day supply in March, down from 60 days in February, while truck inventory levels fell to a 66-day supply (previously at 72 days).
Given the robust level of demand to date in 2012, LMC says that overall inventory levels are ‘back in check’ (under 60 days). LMC Automotive is increasing its North American production outlook for 2012 to 14.2 million units (up from 14.0 million units) to keep pace with the higher level of demand.
