WESTLAKE VILLAGE, Calif. — New-vehicle retail sales in March are showing signs of improvement following slower-than-expected sales in the first two months of 2014, according to a monthly sales forecast developed jointly by J.D. Power and LMC Automotive.
New light-vehicle retail sales are expected to reach 1.19 million units in March — a 7% increase compared with March 2013. The two firms also project the seasonally adjusted annualized rate (SAAR) for retail sales to reach 12.6 million. Retail sales in February reached 946,766 units, while the SAAR settled in at 12.4 million.
“The severe weather had an impact on retail sales in January and February, but as the weather has improved, so have sales,” said John Humphrey, senior vice president of the global automotive practice at J.D. Power. “Additionally, stronger pricing coupled with lower reliance on fleet continues to bode well for the overall health of the sector.”
The average new-vehicle retail transaction price in March — as it has been for seven consecutive months — remains above $29,300, up nearly $700 from March 2013 and the highest level ever recorded for the month of March.
Total light-vehicle sales in March 2014 are expected to rise 6% to nearly 1.5 million units. Fleet sales as a percentage of total sales remain low, with sales expected to account for 20% of total sales in March — a percentage point below March 2013. Fleet sales for the full year are projected to reach 17.3%, which is near the record low of 17.1% in 2009.
Low fleet mix combined with a weather-impacted sales pace in January and February has led to a slight downward revision in the firms’ outlook for 2014. LMC Automotive has cut its forecast for total light-vehicle sales in 2014 to 16.1 million units from 16.2 million. The retail light-vehicle sales forecast remains at 13.3 million units.
“The selling pace for the year was slow out of the gate, but the industry remains poised for stable growth in the near- to mid-term,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “Modest improvements are expected as 2014 progresses, the recovery from the deep recession nears an end and the market transitions to a post-recovery stage.”
North American vehicle output in February 2014 finished at 1.4 million units, a 4% increase from February 2013. Inventory levels on a days’ supply basis are still hovering at nearly 80 days, which is 20 days higher than ideal levels. LMC Automotive said it expects a faster selling rate to continue to pull down inventory levels, ending the quarter on a positive note.
“In spite of flat January numbers and higher-than-normal inventory levels, output for the first quarter is expected to exceed 4 million units and to top first quarter 2013 levels by 3 percent,” said Bill Rinna, senior manager of forecasting at LMC Automotive. “Although demand is starting to pick up, production growth is also being helped by new models, most notably the Jeep Cherokee, Nissan Rogue, and the Nissan Versa Note.”
LMC Automotive’s North American production forecast for 2014 remains at 16.5 million units, with U.S. volume of 11.1 million units, a 3% increase over 2013. Production in Mexico is expected to increase 7% to 3.1 million units, while Canada volume is expected to drop nearly 5%, to 2.3 million units.
