Whether demand will remain strong in the months ahead will depend, in part, on demand for new entries like the 2013 Chevrolet Malibu.
The automotive upsurge is continuing and could lead the industry into one of the strongest spring selling seasons it has seen since the economy started to flounder.
Kelley Blue is predicting new-vehicle sales will surpass 1.05 million units, reach a 13.8 million seasonally adjusted annualized rate, or SAAR, for February 2012, an increase of 6.4% from this time last year. But the market seems to be reflecting not only an improved economy, but also concerns about rising fuel prices.
February sales are being helped along by rising interest in compact models, increased inventory levels, improved access to credit, attractive finance offers available to consumers — and the fact that Leap Year means one additional selling day during the year’s shortest month — according to Kelley’s analysis.
New-vehicle sales have remained above a 13.6 million SAAR since November 2011. However, Kelley Blue Book believes the annualized sales pace will slow after April, as pent-up demand is satisfied from Toyota and Honda’s inventory shortfalls.
“From a pure volume perspective, in the months ahead sales will continue to exceed last year’s figures, but this year there may be more volatility from month-to-month than in 2011,” cautioned Alec Gutierrez, senior market analyst of automotive insights for Kelley Blue Book.
“Sales were remarkably flat from May through November 2011, due to the production woes faced by Toyota and Honda. Now that they are producing vehicles at full capacity, a return to traditional seasonal patterns is likely through 2012.”
But consumers shopping in February and March will find an improved selection of vehicles as a result of increased production in January, especially among the Japanese, who were hard pressed to meet demand during most of 2011 due to the March earthquake and tsunami that crippled that nation’s auto industry.
Manufacturers – domestic and foreign — ramped up production in anticipation of President’s Day sales promotions and the onset of the spring selling season beginning in March, Kelley reported.
The website and tracking service also expects Chrysler to post another strong performance in February; however, the pace of improvement should slow in the months ahead. In addition, with the exception of General Motors, KBB projects all automotive manufacturers will post year-over-year sales gains in February.
General Motors continues to report declines due to a sharp reduction in incentive spending, which it cut by 16% in January, according to Autodata, as well as increased competition from new redesigns. GM has several new introductions that should help boost sales later in the year, including the redesigned 2013 Chevrolet Malibu and the all-new Cadillac ATS and XTS luxury models.
“The Chrysler 200 didn’t sell in significant volume until March 2011, so Chrysler’s growth should level off beginning next month,” said Gutierrez. “Later in the year, Chrysler should experience another boost with the launch of the all-new Dodge Dart, a much-needed entrant into the already competitive compact segment. Strong sales are expected in the compact and subcompact categories, especially as fuel prices continue to rise,” he said.
In terms of year-over-year growth, Kelley Blue Book projects subcompacts to lead all other segments, especially with fuel prices surpassing $3.50 per gallon, nationally.
“Although traditionally viewed as a budget segment reserved for those consumers willing to accept fewer amenities, cheaper materials and less than an awe-inspiring driving experience, today’s subcompacts compare favorably to many compacts or midsize sedans,” said Gutierrez.
“The Nissan Versa, Chevrolet Sonic, Ford Fiesta, Hyundai Accent, Honda Fit and Toyota Yaris all are excellent examples of either all-new or redesigned products that many consumers would be happy to call their own. Each of these vehicles offers 40 mpg or more on the highway and would make an excellent choice for anyone looking to save a few bucks at the pump,” he said.
Gutierrez notes that sales in the midsize category were strong during January, and KBB anticipates February will be another solid month for the Camry-led segment. The Toyota sedan topped sales gains in January on the strength of its 2012 redesign – though, as TheDetroitBureau.com reported, Toyota also got a strong boost by unusually heavy sales of Camry to the fleet market.
(For more on Toyota’s turn to fleets, Click Here.)
Nonetheless, this is a segment to watch in 2012, especially with redesigns coming later in the year for the Honda Accord, Ford Fusion, Nissan Altima and Chevrolet Malibu.