ATLANTA – February – like January before it – is known to be a weak month for vehicle sales, and this year should be no different. According to a forecast released by Cox Automotive, new light-vehicle sales volume is expected to rise nearly 6% compared to last February and 16% compared to last month. With leap year providing an extra selling day – 25 this year versus 24 last year, the gain is less impressive. After incorporating seasonal adjustments, the sales pace is expected to rise just slightly, from 16.5 million in February 2019 to 16.6 million this year.

We’ve settled at a slower pace over the last few months, and our expectation is the new pace will continue this month and through 2020.

According to Charlie Chesbrough, senior economist with Cox Automotive: “We’ve settled at a slower pace over the last few months, and our expectation is the new pace will continue this month and through 2020. We are in the late stage of the sales cycle, and demand is weakening even though incentives are relatively high.”

There are upside and downside risks to the forecast this month as sales in February can be greatly influenced by many factors, including harsh winter weather. Extreme weather can impact vehicle sales in winter months as shopping on dealership lots becomes more difficult, and cold, gray climate conditions do not support buyer excitement. Thus far, this February has not seen massive snowstorms or cold across much of the country, and these mild conditions should support healthy vehicle sales. However, another risk to the vehicle market remains credit availability, particularly in subprime lending. Auto financing continues to remain strong, but a downturn in the economy will impact credit availability.

The record for February occurred in 2000, at the peak of the dot-com bubble when sales reached 1.5 million vehicles, and the seasonally adjusted annual rate (SAAR) was 18.9 million. Exceeding this record is not expected this February as there is little stimulus from either the economy or the market that would lift the sales pace to this level. However, a higher than forecasted SAAR is possible given the strength of the underlying economy. Unemployment is at 50-year lows and the stock markets are at near all-time record highs. While fear around coronavirus is growing, it is unlikely to impact the auto market in February.

The vehicle sales pace is expected to trend lower in 2020, even though economic and consumer conditions remain strong. As Cox Automotive has noted prior, affordability is a major concern in the vehicle market as MSRPs, and monthly payments continue to increase. Retail sales have been in decline in recent years, and this trend is likely to continue in 2020.

February 2020 Sales Forecast Highlights

In February, new light-vehicle sales, including fleet, are forecast to rise to 1.33 million units, up about 75,000, or 5.9% compared to February 2019. When compared to last month, sales are expected to increase over 185,000 units, or 16%.

The SAAR in February 2020 is estimated to be 16.6 million, slightly below January’s 16.8 million pace, but above last February’s 16.5 million level. This February has 25 selling days, one more than last year, and 2020 is also a leap year, so many contributing factors to the SAAR seasonal adjustments.

 February 2020 Forecast

All percentages are based on raw volume, not daily selling rate.

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Originally posted on F&I and Showroom

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