As September winds down into its last week, J.D. Power and Associates expects new-vehicle selling rates to be stronger than last month.

J.D. Power indicated this month’s new-vehicle retail sales are projected to come in at 842,400 units, which represents a seasonally adjusted annualized rate of 10.3 million units.

Analysts pointed out this level marks the first time the retail selling rate would be above 10 million units since the 10.8 million-unit rate in April. They explained retail transactions are the most accurate measurement of true underlying consumer demand for new vehicles. J.D. Power arrived at its forecast by gathering real-time transaction data from more than 8,900 retail franchisees throughout the United States.

“Coming off a solid Labor Day sale, retail sales exhibited unexpected strength in the second week of September, as the recovering inventory levels have helped to bring buyers back into the market,” explained Jeff Schuster, executive director of global forecasting at J.D. Power.

“However, incentive levels remain flat compared with August and the economy remains a concern, so the sales pace in the second half of the month is expected to give back some of the gains,” Schuster continued.

J.D. Power also shared its expectations for this month’s total light-vehicle sales. The firm thinks this figure will come in at 1,038,700 units, which is 9 percent higher than September of last year.

Analysts contend fleet sales are expected to be down 1 percent compared with last September but will account for 19 percent of total sales.

J.D. Power Maintains Annual Forecast

Given the relative strength of September, J.D. Power decided to maintain its forecast for light-vehicle sales in 2011 and 2012. The firm thinks this year’s total light-vehicle sales are expected to come in at 12.6 million units, a 9 percent increase from 2010.

Analysts’ forecast for this year’s retail light-vehicle sales stands at 10.2 million units, an increase of 11 percent from a year ago.

For 2012, J.D. Power’s outlook for total light-vehicle sales remains at 14.1 million units, and retail light-vehicle sales are at 11.5 million units. However, John Humphrey, J.D. Power’s senior vice president of automotive operations, acknowledged there is a high level of uncertainty that remains.

“The uncertain global environment, specifically the debt troubles in Europe, continue to be the major source of downside risk in the U.S. economy and automotive markets,” Humphrey said.

“Until a level of stability is reached globally and consumer confidence is returned, the U.S. automotive selling pace is not expected to return to pre-recession levels,” he continued.

Review of North American Production

Through August, J.D. Power said light-vehicle production in North America jumped to 8.5 million units, up 8 percent from the same period last year.

Analysts also found the Detroit 3 OEMs have ramped up production by 16 percent year-to-date, while the Japanese manufacturers have lost 8 percent — due to the parts shortages from the earthquake in Japan back in March.

Elsewhere, J.D. Power noted European OEMs are up 38 percent for the same period, as a result of added production of the BMW X3 and Volkswagen Passat in North America and strong demand for the new Volkswagen Jetta.

The firm determined vehicle inventory maintained a 49-days’ supply at the beginning of September, unchanged from August. J.D. Power said car inventory remained at the same 40-day level as it was in the previous month, while truck supply edged down by one day to 57 days.

With stronger production levels and imported shipments returning, analysts contend inventory is improving — although several manufacturers continue to have limited supply availability. The specific ones they spotted include Hyundai/Kia with a 21 days’ supply (was 19 days in August), Honda with a 32 days’ supply (previously 28 days) and BMW at 33 days’ supply (previously 30 days).

J.D. Power’s 2011 North American production outlook remains on track for 12.9 million units, an increase of 9 percent from last year.

Schuster pointed out fourth-quarter production output is expected to reach 3.3 million vehicles, which is an increase of 11 percent from the same quarter of last year.

“Continued inventory stock replenishment and Japanese OEM recovery is responsible for the large year-over-year increase relative to the lower level of recovery in vehicle demand,” Schuster explained.

“As inventory normalizes into 2012, growth in production levels is expected to slow to a pace more consistent with sales,” he concluded.