Analysts at JD Power are warning that while February’s US light vehicle market is likely to come in higher than last year’s, seasonally adjusted sales are forecast to be down on last month as the market suffers the effects of the Toyota recalls and winter storms.
However, the organisation raised its 2010 US light vehicle market forecast, citing better economic growth as well as improved financing and leasing conditions.
“While February sales have improved from a year ago, the pace of the recovery has hit a speed bump, with this month’s SAAR down from January’s selling rate,” said Jeff Schuster, executive director of global forecasting at JD Power.
“This hiccup appears to be the result of consumers waiting out the Toyota recalls and winter storms impacting showroom traffic, but the effects of these external factors are likely temporary and the recovery is expected to get back on track.”
February new vehicle retail sales are expected to increase marginally compared with February 2009, according to JD Power.
February new vehicle retail sales are expected to come in at 561,500 units, which represents a seasonally adjusted annualised rate (SAAR) of 8m units, compared with 7.9m units in February 2009. Fleet sales continue to rebound from the lower levels experienced one year ago. As a result, total sales for February 2010 are projected to come in at 741,500 units, up 8% from February 2009.
The total market SAAR is estimated at 9.9m units in February, which compares with 10.7m in January and 9.1m units in February 2009.
JD Power’s figures cited for February 2010 are forecasted numbers based on the first 17 selling days of the month.
The good news is that JD Power thinks the outlook for sales is stronger.
Given stronger-than-expected economic growth in the fourth quarter of 2009 and improved financing and leasing conditions, JD Power is increasing its 2010 forecast to 11.7m units (from 11.5m) for total sales and to 9.6m units (from 9.5m) for retail sales, despite February’s expected performance.
At the beginning of February, vehicle inventory was at a 71-day supply, compared with 121 days in February 2009, the organisation said.
For the first quarter of 2010, production remains on track to increase by more than 1m units from the same period one year ago. Production volume for 2010 overall is expected to increase by 24% to 10.6m from 8.5m in 2009.
“Although inventory levels have improved from a year ago, they have increased from levels during the past four months—creating a risk of inflated inventory levels in the short term, given the slower sales pace in February,” said Schuster.
“In addition, the recovery in production levels is more pronounced than the recovery in demand after the extensive production cuts in 2009, adding concern of further inventory troubles throughout the year.”