J.D. Power: Auto Recovery Faces Hurdle, Retail Sales Likely Up 1 Percent
WESTLAKE VILLAGE, Calif. — The rebound in auto sales appears to have met a "speed bump" in February stemming from Toyota recalls and winter storms, as new-vehicle retail sales will likely show only a minor year-over-year uptick, according to J.D. Power and Associates.
More specifically, J.D. Power is forecasting new-vehicle retail sales of 561,500 vehicles, an increase of 1 percent compared with 556,689 units a year ago. The resulting seasonally adjusted annualized rate would be 8 million, up from 7.9 million last year.
January's retail SAAR was 8.1 million.
Meanwhile, analysts expect February fleet sales to gain some ground from soft numbers last year, pushing the total new-vehicle sales to a projected 741,500 vehicles.
This would be an 8-percent upswing compared to the year-ago period and represent a total SAAR of 9.9 million, up from the SAAR of 9.1 million in February 2009.
In January of this year, the total SAAR was 10.7 million units.
"While February sales have improved from a year ago, the pace of the recovery has hit a speed bump, with this month's SAAR down from January's selling rate," explained Jeff Schuster, executive director of global forecasting at J.D. Power.
"This hiccup appears to be the result of consumers waiting out the Toyota recalls and winter storms impacting showroom traffic, but the effects of these external factors are likely temporary and the recovery is expected to get back on track," he added.
In fact, J.D. Power said that thanks to unexpectedly strong growth in the economy during the final quarter of last year and healthier financing and leasing conditions, its 2010 forecast for total sales has been boosted from 11.5 million units to 11.7 million units, while its retail sales forecast has climbed from 9.5 million units to 9.6 million units (in spite of the rather static retail totals projected for February).
Continuing on, J.D. Power pointed out that there was a 71-day supply of vehicle inventory at the start of this month, down from 121 days' worth of inventory a year ago.
Analysts noted that first-quarter production is on pace to be ahead of the year-ago period's production by more than 1 million vehicles. Moreover, J.D. Power predicts that 2010 production volume will be 10.6 million units, a 24-percent gain from the 8.5 million vehicles built last year.
"Although inventory levels have improved from a year ago, they have increased from levels during the past four months creating a risk of inflated inventory levels in the short term, given the slower sales pace in February," Schuster stated.
"In addition, the recovery in production levels is more pronounced than the recovery in demand after the extensive production cuts in 2009, adding concern of further inventory troubles throughout the year," he added.