Here’s an item dealers still can be thankful for now that all of the turkey leftovers are gone: New-vehicle sales appear to be back on track after Hurricane Sandy.
The latest sales forecast developed by J.D. Power and Associates’ Power Information Network and LMC Automotive showed the new-vehicle retail selling rate is back to a healthy level this month after being negatively impacted by Hurricane Sandy in October.
November new-vehicle retail sales are projected to come in at 931,900 units, which represent a seasonally adjusted annualized rate of 12.9 million units.
Analysts said November is expected to reflect the highest retail selling rate since January 2008. They emphasized retail transactions are the most accurate measurement of true underlying consumer demand for new vehicles.
“Sales have strengthened each week in November, which bodes well for a strong finish to the month and the year,” said John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates.
“We expect healthy sales in December as the industry continues to recover from Sandy and leads into its year-end sales events,” Humphrey continued.
The firms indicated total light-vehicle sales in November are expected to increase 12 percent from November of last year with volume at 1,113,500 units.
Fleet sales are expected to hold steady below a 17 percent share of total sales, which is the same level as October but lower than the 18 percent share last November.
LMC Automotive is maintaining the 2012 forecast for total light-vehicle sales in the United States at 14.4 million units and the forecast for retail sales at 11.7 million units.
While the forecast still rounds to the same numbers as it did in October, the overall outlook is more favorable, according to analysts.
LMC Automotive highlighted the U.S. sales forecast for next year remains stable at 15 million units for total light-vehicles and 12.2 million for retail sales, but represents a slower growth rate of 4 percent from 2012.
Jeff Schuster, senior vice president of forecasting at LMC Automotive, noted there continues to be the possibility of accelerating the growth in 2013 as the current level of uncertainty is expected to be reduced in the first half of the year.
“The irrepressible need and willingness of consumers to replace aging vehicles is stronger than the effects of natural disasters and fiscal turmoil both here and abroad,” Schuster said.
“A sustained recovery pace in auto sales is expected over the next six months, barring any fiscal cliff hangover, but the medium-term forecast is still dependent on more pronounced economic activity and growth,” he continued.
Analysis of North American Production
The firms calculated North American light-vehicle production volume remains up 20 percent through the first 10 months of this year, compared with the same period a year ago.
Volume through October is at nearly 13.1 million units, the same volume level as in all of 2011.
Vehicle inventory in early November rose to a 71-day supply — the highest day supply level in 2012 — compared with 59 days in October.
Analysts explained the supply growth is a result of an increase in inventory ahead of anticipated year-end sales, as well as the impact of Hurricane Sandy, which caused significant damage along the East Coast and slowed demand in the last week of October.
Car inventory has risen to a 66-day supply from 51 days in October, while truck inventory has increased to a 77-day supply from 65 days.
The firms indicated vehicle inventory levels should stabilize this month and into December as sales are expected to recover due to consumers who had delayed their purchases last month returning to the marketplace following the storm and from additional sales due to the need to replace damaged vehicles.
LMC Automotive’s 2012 North American production forecast stands at 15.3 million units, which is a 17-percent increase from 2011.
The North American production forecast for 2013 is expected to be nearly 15.8 million units, a mere 2-percent rise from 2012, with further upside potential.
“The continued pace of demand in North America, with sales up 13 percent through October, is supporting the short-term production plan and volume at the highest level since 2005,” Schuster said.
“Production levels continue to be managed to demand, so a growing level of inventory is not setting off any alarms, as some inventory building is normal as a year closes,” he concluded.