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March Sales Forecast Up 9 Percent From Year Ago according to J.D. Power

March 24, 2011
4 min to read


DETROIT - March U.S. auto sales are expected to increase from last year despite rising gasoline prices and inventory concerns after the earthquake in Japan, J.D Power and Associates said today in a monthly report.


U.S. light-vehicle sales in March are expected to top 1.2 million units, up 9 percent from March 2010, J.D. Power said. New-vehicle retail sales alone are expected to account for an estimated 991,900 units, reported Automotive News. This represents a seasonally adjusted annual rate of 10.9 million units, up 15 percent from the rate in March last year.

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Overall, J.D. Power raised its 2011 first quarter sales forecast to a 10.7 million annual rate, up from its forecast of 10.6 million made last month. Because of the strength in retail sales, J.D. Power also increased its 2011 retail sales forecast to 10.6 million units, up from 10.5 million. Its forecast for 2011 U.S. light-vehicle sales remains at 13 million units, up 11 percent from last year's actual light-vehicle sales.


"With all the dynamic variables kind of interplaying out there right now, we still are seeing strong sales," Jeff Schuster, J.D. Power's executive director of global forecasting, told Automotive News.


"We're also seeing that the likelihood of some inventory shortages is actually causing buyers to maybe push up their purchase decisions to hit the dealerships now while there still is inventory on some of the models that may be in short supply, so March could be getting a boost from that as well."


General Motors Co. sales, which were bolstered by incentives in February, could see a decline in March with the conclusion of lease pull-aheads and lower dealer cash incentives, said Jesse Toprak vice president of TrueCar.com.


The fact that some customers moved up their purchase decision because of the incentives could also harm the automaker's sales, possibly allowing an opening for Ford Motor Co.

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“Ford could actually outsell GM in March," said Toprak. “It'll be close."


Industry wide, lower sales numbers from decreased incentives are normal, even during periods of recovery, said Schuster.


“That’s pretty typical that when you ratchet back on incentive levels or don’t continue to increase them there can be a payback from that,” he said.


Some top-selling imports affected by the crisis in Japan are the Toyota Prius, Nissan Rogue and Honda Fit. In addition, GM has suspended production of the Chevrolet Colorado and GMC Canyon compact pickups at its Shreveport, La., plant because of parts shortages from Japanese suppliers.


"I don't think we'll see any substantial impact this month but assuming because of the lag in getting the vehicles here, we're likely to see some inventory shortages in April and May and possibly even beyond that," Schuster said. "Some of the boost that we are seeing now, there could be some payback in the next couple of months."

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U.S. light-vehicle sales for March are expected to be 1,205,200 units, with fleet sales accounting for 18 percent of the total, down from 20 percent in February. The estimate is based on the expectation that Japanese automakers will send more vehicles into the retail market in case of inventory shortages, Schuster said.


"It's much easier to delay a fleet sale, especially if it's a rental car sale, and get that volume to the retail market than it is to do the opposite," he said.


To make its forecast, J.D. Power examines transactions at 8,900 U.S. retail franchises during the first 17 selling days of the month.


Last month, North American light-vehicle production was 1.06 million units, 15 percent higher than in February 2010. But J.D. Power said March production already is taking a hit because of the disaster in Japan.


Schuster said the Japan disaster's effect on production might linger into April and May, but for now "our 2011 production forecast remains at 12.9 million units, as we expect any lost volume would be made up later in the year."

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February was a strong month for the auto industry with vehicle sales soaring in the wake of continued economic recovery and incentives. This month, J.D. Power's seasonally adjusted annual rate forecast dropped from the February forecast of 11.1 million units.


As a result of last month's strong sales, J.D. Power says days' supply fell to 60 says, from 71 days at the end of January. Schuster said strong March sales and supply constraints from Japanese imports would continue to drop inventory numbers and automaker incentives in the coming months.


"Inventory was kind of in check even before this [Japanese] situation and before March was showing it was going to be a relatively strong month, so we definitely expect to see inventory at very low levels coming out of March," he said. "We would expect incentive levels industrywide to fall in March and certainly as we go into April because the inventory simply isn't there."

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