Consumers on Pace to Spend More Than $32 Billion on New Vehicles in February
J.D. Power and LMC Automotive said this week that consumers are on pace to spend more than $32 billion on new vehicles this month, a first for the month of February. The two firms noted, however, that their projected 13.9 million retail SAAR is the lowest level since June and well below the 15.3 million pace set last September.
DETROIT— February new-vehicle sales are expected rise 8.1% from a year ago, J.D. Power and LMC Automotive said this week. If realized, the prediction would put customers on pace to spend more than $32 billion on new vehicles — a first for the month of February.
Based on that forecost, retail sales should total 1,046,700 units in February, up from 968,316 in February 2015. The forecast also puts this month's retail SAAR at 13.9 million units, a significant increase from last February's 12.8 million-unit retail SAAR.
The SAAR for total sales is projected to land at 17.7 million, a year-over-year increase of 1.4 million units and the highest rate since 2000.
“The year-over-year sales growth projection for February is strong, but we need to keep in mind that it is aided by the fact that sales in the upper East Coast, Midwest and Texas were hampered by weather last February,” said John Humphrey, senior vice president of the global automotive practice at J.D. Power. “To further put the February sales projection into context, while the retail SAAR of 13.9 million is unquestionably a high level of vehicle demand, it is the lowest monthly level since last June and well below the 15.3 million pace last September.”
The compact car segment is expected to post the highest retail sales total for the second consecutive month. Part of that is driven by high incentives manufacturers are offering ahead of new-model launches later this year. The improvement, however, won't be enough to offset the weak overall demand for cars, which should grab a record-low 42% share of the market in February.
Additionally, a record number of people are also choosing to lease or extend their loan terms. So far this year, according to the firms, leases and loans of 72 months or longer represent a combined 65.1% of all retail sales.
“Consumers seem to be shrugging off the volatility in the stock market and higher interest rates. Very low fuel prices and many new vehicles in showrooms should help drive another strong year for auto sales,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive.
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