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Auto Sales Recovering After Slow Start to 2014

Auto Sales Recovering After Slow Start to 2014

By Jeff Youngs, March 20, 2014
Cold and snowy weather may have depressed new-vehicle sales in January and February of 2014, but customers are returning to dealership showrooms in March, according to a new sales forecast jointly issued by J.D. Power and LMC Automotive. According to the latest forecast, retail sales are expected to demonstrate a 7% increase over March 2013, with 1,148,338 new cars, trucks, SUVs, and minivans rolling into American driveways.

Additionally, the average transaction price for those new vehicles remains above $29,300, the highest ever for the month of March and $700 higher than in March 2013, reflecting continued economic strength and improved consumer confidence.

"The severe weather had an impact on retail sales in January and February, but as the weather has improved, so have sales," said John Humphrey, senior vice president of the global automotive practice at J.D. Power. "Additionally, stronger pricing coupled with lower reliance on fleet continues to bode well for the overall health of the sector."

The lower level of fleet sales referred to by Humphrey is one reason that LMC Automotive is lowering its overall expectations for 2014. Those lower fleet sales, coupled with slow sales in January and February due to abnormally severe winter weather conditions, have led LMC Automotive to lower its total vehicle sales forecast from 16.2 million units to 16.1 million units for the year.

"The selling pace for the year was slow out of the gate, but the industry remains poised for stable growth in the near- to mid-term," said Jeff Schuster, senior vice president of forecasting at LMC Automotive. "Modest improvements are expected as 2014 progresses, the recovery from the deep recession nears an end, and the market transitions to a post-recovery stage."

Factories continue to pump new vehicles out, with production running 4% ahead of the prior year in February 2014. At the start of March 2014, automakers had stockpiled an 80-day supply of new vehicles, while a 60-day supply is considered ideal. LMC Automotive isn't concerned, though, and expects a faster selling rate to reduce inventories to normal levels.

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