JD Power says that US vehicle retail sales have been strong so far in February, with the selling rate outperforming January’s.
A monthly sales forecast developed by JD Power and LMC Automotive projects that February new vehicle retail sales will come in at 857,400 units, an increase of 5% from February 2011.
“Retail light-vehicle sales in February are strong, which makes us modestly optimistic about the growth of sales going forward,” said John Humphrey, senior vice president of global automotive operations at JD Power. “More so, we’re increasingly confident that the fundamentals are in place to continue to support an upbeat sector outlook for the coming year.”
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In addition to pent-up demand due to an ageing fleet, factors driving this optimism include a rebound in leasing and availability of consumer credit and long-term financing. Through the first 17 selling days of February 2012, lease penetration is at 20%, up from a low of 13% in 2009. JD Power/LMC says that 72-month loans account for 23% of all retail sales in February 2012 – the highest level in five years – up from 19% in February 2011.
“We’re seeing a rebound in leasing and a slight improvement in credit availability, which is bringing customers that were shut out of the market two or three years ago back into dealerships,” said Humphrey. “Both of these elements bode well for consumers in terms of making vehicles more affordable, which will drive more traffic into showrooms.”
Total light vehicle sales in February are expected to come in at 1,064,700 units, which is a 3% increase from February 2011. After a robust fleet mix of 25% in January 2012, levels are expected to settle in the 19% range in February, which is slightly below levels one year ago.
The total market SAAR for February is forecast at 14m units.
As pronounced recovery in vehicle sales continues through February, LMC Automotive is increasing its forecast for total light vehicles in 2012 to 14m units (from 13.8m units) and to 11.4m units for retail light vehicle sales (from 11.3m units).
“Concerns about the financial crisis in Europe are not holding back the momentum of the automotive recovery in the US,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “The industry is currently well positioned for the best performance since 2007 and is expected to approach full recovery in the next two years with total light vehicle sales at 16.0 million units by 2014.”
North American production
JD Power/LMC said that North American light vehicle production was up 22% in January, compared with January 2011. The Japanese OEMs, particularly Toyota and Honda, are working to replenish inventory stocks from the 2011 earthquake and tsunami disasters, which is evident in their collective January year-over-year increase of 26%. The Detroit 3 and European OEMs each had approximately a 19% year-over-year increase in production volume, while the Hyundai group was up nearly 24% for the same period.
Production levels are expected to continue to increase in the first quarter of 2012, with volume forecasted at 3.7m units, up 10% from the first quarter of 2011.
Vehicle inventory rose to a 66-day supply at the beginning of February (compared with a 52-day supply at the beginning of January). Car inventory is described as at ‘normal’ levels with a 60-day supply in February, up from 55 days in January, while truck inventory levels climbed to a 72-day supply (previously at 50 days). JDPower/LMC said that several manufacturers (Hyundai, Subaru, and BMW) continue to have supply constraints with inventory levels under a 40-day supply, which could impact sales performance of some models.
“As the outlook for demand improves and inventory stabilises, LMC Automotive has increased its North American production outlook for 2012,” said Schuster. The forecast now stands at 14m million units (from 13.8m), which represents an increase of 7% from 2011.
