Sales of new cars and trucks in the United States have remained relatively sluggish in March, though analysts reportedly say tax refunds and heftier consumer incentives should provide something of an industry boost.
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According to Associated Press (AP), Goldman Sachs and Merrill Lynch both predict a seasonally adjusted annual sales rate for March of 16.6 million units, up 3% from a year ago but still soft given that March typically marks the start of the spring selling season.
AP noted that the seasonally adjusted annual sales rate, known as SAAR, indicates what sales for the full year would be if they remained at the same pace for all 12 months. The rates were 16.1 million in January and 16.4 million in February, following full-year sales of 16.7 million units in 2003.
In a research note cited by Associated Press, Goldman Sachs analyst Gary Lapidus said he expects the final tab for incentives to be up sharply for March. He reportedly cites in particular DaimlerChrysler’s Chrysler Group, which has beefed up deals significantly as it tries to clear out old models ahead of nine new or redesigned vehicles this year.
“Following unprecedented tax cuts, auto sales should enjoy an unusually good refund season, although the full effect will not be felt until April and May,” Lapidus said, according to AP.
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By GlobalDataDavid Healy, who tracks the industry for Burnham Securities, reportedly predicts a SAAR of 16.5 million units for March. According to Associated Press, he said dealer stocks are on the high side, which could mean profit-curtailing production cuts from some carmakers in the second and third quarters.
“The huge increases in sales incentives that took place in early 2003 probably harvested any ‘pent-up demand’ that might have existed in the marketplace,” Healy reportedly said, adding: “Accordingly, if there is such a thing as ‘pent-down demand’, we’re having it now.”
AP said Healy and Lapidus both predict General Motors and Ford will post positive sales numbers for March, while they expect Chrysler to be down – both analysts forecast foreign brands to be up 2%.
Associated Press said that, in an industry report card released last Thursday, Standard & Poor’s said it still expected a slight uptick in overall US sales this year, helped by an improvement in general economic conditions.
However, on a less positive note, the ratings agency reportedly said “difficult long-term trends will predominate.” Specifically, S&P said intense competition and the persistence of excess production capacity will likely contribute to “subpar” financial performances at GM, Ford and Chrysler, Associated Press noted.
