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March U.S. New Auto Sales Uptick Primed by Robust Rebates

March U.S. New Auto Sales Uptick Primed by Robust Rebates

By Philly Murtha, March 24, 2017

U.S. new-vehicle (retail and fleet) sales in March will rise nearly 2 percentage points (1.6%) to an estimated 1.62 million units from 1.59 million units compared with the same month a year ago. Also, SUVs and pickup trucks—with a combined market share of 61.5%—still dominate the sales mix in a market that is bolstered by rich incentives averaging $3,768 per vehicle, according to a March sales update from J.D. Power and auto forecasting partner LMC Automotive.

According to the update, March will be the first month this year to experience a year-over-year gain in new car and light-truck deliveries. Based on data collected during the first 16 selling days of March, J.D. Power-LMC projects that retail new-vehicle deliveries this month will climb 2.4% to 1.245 million units from 1.216 million units in March 2015—a gain of nearly 29,800 unit sales. Fleet deliveries, which may dip to 374,600 units, are expected to account for a smaller 23.1% of the sales mix (vs. 23.8% in March 2016).

Auto Sales photoIncentives will continue to spur new-vehicle sales, according to J.D. Power’s Deirdre Borrego, senior vice president of automotive data and analytics, who points out that incentives currently average 10.4% of a new-vehicle’s MSRP, which is the highest percentage since March 2009 when rebates averaged 11.3% during the Great Recession.

As the first quarter closes, Jeff Schuster, senior vice president of forecasting at LMC Automotive, said that demand for light-vehicles in the U.S. remains stable. “The President’s policy direction is taking center stage as potential positive and negative drivers of auto sales over the next 18 months,” he said.

However, Schuster cautions, “A border tax could have massive negative implications with more than 2 million units of new-vehicle demand at risk if imported vehicles and parts are taxed at 20%. Such a tax would increase the average price of all vehicles by 11% and could set off a trade war pulling the country into a recession.” In spite of uncertainty, LMC is holding its forecast for calendar 2017 light-vehicle sales at 17.6 million units, up a fraction of a point from 2016.

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