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Auto Sales Remain Strong, Automakers Keep Lid on Incentives

Auto Sales Remain Strong, Automakers Keep Lid on Incentives

By Jeff Youngs, February 25, 2013
According to a sales report developed by J.D. Power and Associates and LMC Automotive, retail auto sales remain strong in February, trending 7% higher than in the same month last year, and prompting LMC Automotive to raise its annual light-vehicle sales forecast to 15.3 million units from 15.1 million units.

"All signs of the industry's health are positive right now," said John Humphrey, senior vice president of the global automotive practice at J.D. Power and Associates. "Average transaction prices are up, incentives are stable, leasing is at a healthy level and newly redesigned models continue to make an impact on the marketplace."

Though vehicle inventory levels in February rose to a 74-day supply from a 59-day supply in January, J.D. Power and Associates expects inventory levels to rebalance within the next month or two. "Automakers deserve credit for doing a much better job of keeping alignment of production and demand," said Humphrey. To meet demand, there are approximately 600,000 additional light vehicles in stock or in transit from the factory, compared with February 2012.

Despite the rise in inventory, J.D. Power notes that incentives have remained flat year over year. Humphrey said, "New-vehicle transaction prices are averaging nearly $1,000 more in February than the same period in 2012."

On the strength of continued strong sales, LMC Automotive is increasing its U.S. forecast for total light-vehicle sales in 2013. The forecast increases by 200,000 units to 15.3 million units from 15.1 million units, with the increase evenly split between fleet and retail sales.

"The current fundamentals that are driving strong vehicle sales--pent-up vehicle demand and a stable, recovering economy--are expected to get a boost by additional positive factors this year," said Jeff Schuster, senior vice president of forecasting at LMC Automotive. "An expected recovery in the housing market, and 50 percent more new-model launches combined with an increase in lease maturities should keep light-vehicle sales climbing throughout the year."

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