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Q1 Sales Rate Outpacing Annual Forecast, Reports JD Power

March 22, 2012

WESTLAKE VILLAGE, Calif. — New-vehicle retail sales are on track to end the first quarter particularly strong, with performance in March continuing the trend from the past several months, according to J.D. Power and Associates and LMC Automotive.

March new-vehicle retail sales are projected to come in at 1,086 million units, the highest monthly volume in more than two years. This would put the industry at a seasonally adjusted annualized rate (SAAR) of 11.6 million units.

"Each month of strong sales brings with it increased optimism that the pace of growth represents a true recovery for the sector," said John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates. "Barring any future shock related to geopolitical issues in the Gulf region and further upward pressure on the price of oil, we believe sales will continue on a solid pace for the balance of the year."

Through the first 18 days of March, sub-compact and compact cars accounted for approximately 23 percent of retail sales in the United States, the highest level since the CARS program was implemented in 2009. As a result, sub-compact and compact cars are quickly moving off dealer lots, according to JD Power’s Power Information Network (PIN).  Combined, sub-compact and compact cars were on dealer lots an average of 42 days before being sold, compared with the 48 days industry average. Turn rates also are substantially lower, 17 fewer days for sub-compact cars and 46 fewer days for compact cars.

Conversely, full-size pickup trucks are sitting on dealer lots an average of 68 days, 11 days longer than they were a year ago.

Total light-vehicle sales in March are expected to come in at 1.372 million units, which is a 6 percent increase from March 2011. In addition to the strong retail performance, fleet mix has been higher than normal for the first two months of the quarter, with January and February averaging 24 percent. March is expected to finish slightly lower at 21 percent of total sales.

The 2012 outlook for vehicle sales remains positive, as the first quarter selling rate is expected to come in at 11.6 million units for retail and 14.4 million units for total light vehicles. This sales tempo is ahead of the forecast for the full year of 11.4 million units for retail light-vehicles and 14.1 million units for total light vehicles.

"The first quarter selling rate has outperformed the annual forecast for sales for the first time since 2008, when the automotive market started to decline," said Jeff Schuster, senior vice president of forecasting at LMC Automotive. "The vigorous start to 2012 suggests that there is further upside potential if the current pace continues through the summer months."

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