March sales are expected to be at their highest level in a decade due to poor weather in February.
Sales of new vehicles have picked up in March and are now expected to reach their best level in a decade, according to a new forecast from J.D. Power and LMC Automotive.
“Inclement weather in February caused many consumers to delay their new-vehicle purchase until March,” said John Humphrey, senior vice president of the global automotive practice at J.D. Power.
Based on information collected by the Power Information Network, the combination of strong sales and high transaction prices positions March to set a new record for the month for consumer spending on new vehicles at approximately $37.7 billion, Humphrey said.
Humphrey notes that elevated transaction prices continue to be enabled by extended term loans. Thus far in March, extended term financing (loans of 72 months or longer) has been used in more than 35% of retail deliveries, on pace to set a new record for any month.
“Other key industry metrics continue to demonstrate the industry’s underlying strength. The average new-vehicle transaction price so far in March is $30,530, the highest level ever for the month of March,” he said.
After bouncing back from the sluggish sales that came in the wake of frigid weather in February, total new light-vehicle sales in March 2015 are expected to reach 1,539,600 units, a 4% increase on a selling-day adjusted basis compared with March 2014 and their highest levels for the month since March 2005 when 1,572,909 new vehicles were sold.
New-vehicle retail sales in March 2015 are expected to reach 1,234,700 units, a 4% increase on a selling-day adjusted basis compared with March 2014. The retail seasonally adjusted annualized selling rate in March is expected to be 13.6 million units, 449,000 units stronger than in March 2014 and the highest retail SAAR for the month since March 2002 14.8 million.
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Meanwhile, LMC Automotive is holding its 2015 U.S. forecast of 3% increase in vehicles sales for total light-vehicle sales of 17 million units.
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“Autos didn’t escape a weather-driven hit to the vigorous selling rate trend in February, but upward performance returns in March and is expected to continue throughout the year,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “The U.S. continues to be one of the brighter spots in the global vehicle sales picture in 2015 with stable volume growth.”
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The West Coast slowdown and lockout, slow ramp-ups of new launches, weather and inventory corrections led to a small reduction in overall production in February, compared with a year ago. But manufacturers were also able to clear a significant amount of inventory, as levels declined to a 69-day supply at the beginning of March, down from 82 days in February.
LMC Automotive production forecast for 2015 remains at 17.5 million units, a 3% gain from 2014. The small and compact segments will comprise more than 60% of the volume growth, with the compact premium car segment projected to have the largest volume growth at nearly 90,000 units.