Incentives, Longer Terms Prime February New Car Sales
In the first weeks of February, new-vehicle shoppers returned to dealer showrooms after last month’s snow storms to take advantage of incentives on outgoing compact car models as well as attractive longer-term finance rates—such as lease and loan terms of 72 months or longer—according to a monthly sales update from J.D. Power and auto forecasting partner LMC Automotive.
Total (retail and fleet) light-vehicle sales are expected to rise 8.1% in February to nearly 1.36 million units from about 1.26 million units a year ago. Retail deliveries also are anticipated to increase 8.1% from a year ago, based on sales data collected during the first 11 days of the month. February of both years has the same number of selling days (24).
“Growth projected for February 2016 also is strong this year in comparison to the same month last year when sales on the East Coast, in the Midwest, and Texas were hampered by extreme weather conditions,” said John Humphrey, senior vice president of the global automotive practice at J.D. Power.
At the segment level, compact cars have been volume sellers, mainly due to high incentives on outgoing models and interest in all-new or redesigned models, such as the Honda Civic. Other refreshed or redesigned compact cars include the Chevrolet Cruze, Hyundai Elantra, and Toyota Prius. Overall, however, trucks and SUVs still dominate (58% overall market share), while the car share in February is just 42%—the lowest for any February on record.
In addition, consumers are opting for leases and long-term loans at record levels. Collected retail sales data reveals that nearly two-thirds (65.1%) of leases and loans taken out in February are 72 months or longer, which is a record level for any month. The previous record was set just last month, at 64.3%.
The outlook for new-vehicle sales continues to be upbeat. Jeff Schuster, senior vice president of forecasting at LMC Automotive, said, “Consumers seem to be shrugging off the volatility in the stock market and higher interest rates. Very low fuel prices and many new-vehicle models in showrooms should help drive another strong year for auto sales.”