New-Car Sales On Track for Best March in 5 Years

This month is on track to mark the best March seen for new-car sales in five years.  And as gas prices continue to rise and consumers continue to cash in tax-returns, the demand for fuel-efficient vehicles might be bringing shoppers out to the lots this spring.

Predicting the demand for new cars to continue to remain solid during the rest of 2012, Kelley Blue Book forecasts new-vehicle sales to reach 1.425 million units this month for a 14.6 million seasonally adjusted annualized rate. 

This monthly sales figure would be a 24-percent gain from last month and a 14-percent climb year-over-year.

At more than 1.4 million units predicted to sell, this would also mark the highest number of units sold for any March since 2007, when industry sales topped 1.5 million units overall, Kbb.com noted.

And what is the company’s reasoning behind this predication?

KBB expects this month to garner significant sales because of not only the high consumer demand for fuel-efficent models, but also an interest in “popular redesigns”, such as the Toyota Camry. The company also cited improving supply conditions and attractive finance opportunities as reasons behind a potential sales surge.

Commenting on the projected sales rate, Alec Gutierrez, senior market analyst of automotive insights for KBB, had this to say: “Although we anticipate strong sales in March, it will fall short of the 15.1 million SAAR posted last month

“Sales in February were aided by unseasonably warm weather across the United States and an additional selling day due to the Leap Year, triggering a strong seasonally adjusted sales rate that will not likely repeat this year," he continued.

"Conditions in the economy have generally been positive through the first few months of the year, and if conditions remain steady, the industry can expect to see continued strength in sales for the months ahead.  Rising fuel prices could slow down the current momentum in sales growth if left unchecked, so this will be a key factor to monitor moving forward,” he further explained.

And according to a monthly forecast developed by J.D. Power and Associates and LMC Automotive, a strong March will make for new-vehicle retail sales to end the first quarter of 2012 on a high note.

And though their projection for March was slightly lower than that of KBB’s, it still comes in above the 1 million mark. The two companies projected that new-vehicle retail sales will reach 1,085,800 units, the highest monthly volume in more than two-and-a-half years. This would represent a SAAR of 11.6 million units.

And as for total light-vehicle sales, these are expected to come in at 1,372,400 units, which is a 6-percent increase from March 2011.

The company also noted what contributed to this potential rise.

“In addition to the strong retail performance, fleet mix has been higher than normal for the first two months of the quarter, with January and February averaging 24 percent. March is expected to finish slightly lower at 21 percent of total sales,” officials explained.

"Each month of strong sales brings with it increased optimism that the pace of growth represents a true recovery for the sector," said John Humphrey, senior vice president of global automotive operations at J.D. Power.