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First-Quarter Sales Could Establish Strong Trend for Year

First-Quarter Sales Could Establish Strong Trend for Year

By Jeff Youngs, March 01, 2012
If American consumers keep on shopping for automobiles the way they did in February, the first quarter of 2012 could provide a strong launch pad for automotive sales--as well as the continuing recovery of the U.S. economy--for the rest of the year.

February sales hit a 15.1 million seasonally adjusted annual rate (SAAR), using the industry formula for how many new vehicles it would sell for the entire year if sales occurred at that same pace for all of 2012. That rate was the industry's best month since February 2008, and almost 1 million ahead of last month's pace.

This past month's gains exceeded analyst expectations. They and industry executives attributed the collective performance to the continued manifestation of "pent-up demand" by American consumers whose automobiles, overall as a fleet, are about as old as they have even been on U.S. roads. Also, Japanese makes have largely recovered inventories after last year's constrained supplies. The brightening of some economic indicators and a boost in consumer confidence also were credited.

Moreoever, higher gasoline prices, while an overall damper on consumer perceptions about their economic future, may have nudged some buyers into deciding to purchase more fuel-efficient vehicles to replace their current, perhaps less fuel-efficient, vehicles.

Yet, some analysts cautioned not to expect auto sales to balloon for 2012. Even taking into account some of this recent strength, J.D. Power and Associates recently raised its forecast for full-year sales slightly, to 13.8 million units, compared with last year's recorded sales of 12.8 million units. Anomalous factors last month included unseasonably warm weather across much of the United States and higher-than-usual fleet sales.

In any event, February's gains included strong performance by just about every major brand.
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