WESTLAKE VILLAGE, Calif. — While new-vehicle sales started slow in December, they are expected to finish strong for the month, according to a monthly sales forecast developed jointly by J.D. Power and LMC Automotive.

U.S. consumers are expected to spend more than $34 billion on new vehicles in December, a historic high for the month. The record-breaking level of spending reflects record transaction prices combined with strong retail sales, the most accurate measure of true underlying consumer demand for new vehicles.

New-vehicle retail sales in December are expected to reach 1.135 million units, a 4% increase from December 2012 (adjusted for one less selling day in December 2013). The December seasonally adjusted annualized rate (SAAR) for retail sales is projected to come in at 12.7 million, a decline from 13.4 million in November but more than 660,000 higher (5.5%) than in December 2012. Additionally, average new-vehicle retail transaction prices in December are expected to reach $30,500, up $500 (2%) from a year ago.

“Strong consumer demand in December is the culmination of another strong year for the automotive industry,” said John Humphrey, senior vice president of the global automotive practice at J.D. Power. “Retail sales in 2013 are expected to reach 12.8 million, with consumer spending reaching a record $375 billion, a $40 billion increase from 2012.”

Total light-vehicle sales in December are expected to reach 1.4 million, a 4% increase from December 2012, on a slight year-over-year increase in fleet volume. Fleet share of total light-vehicle sales in December remains below 17%. Fleets account for 17.6% of total sales in 2013.

Total light-vehicle sales in 2013 are set to finish at 15.6 million units, while the LMC Automotive forecast for retail light-vehicle sales remains at 12.8 million units. LMC Automotive has increased its total and retail light-vehicle sales forecasts for 2014 by 100,000 to 16.2 million and 13.3 million units, respectively.

“The budget deal in Washington is helping fuel a higher level of optimism for the economy and auto sales in 2014,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “December sales faced some challenge early in the month, with some sales that pulled ahead in November and winter storms, they have rebounded well, and the year ahead is set up to edge new-vehicle sales closer to pre-recession levels.”

Vehicle production in North America year to date through November has increased 5% from the same time frame in 2013, with nearly 700,000 units of additional volume. Even as inventory has increased, production volume in November remained strong at 1.4 million units, a 4% increase from November 2012.

The Detroit Three continued to build inventory at a rapid pace, and their combined days’ supply climbed from 87 days at the beginning of November to 93 days by the end of the month. Schuster explained that while it is normal for manufacturers to build up inventory to meet year-end demand, the level is slightly ahead of expectations, and doing so this late in the year has the potential to affect production in the first quarter 2014. In contrast, European and Asian manufacturers all maintained or reduced their inventory levels in November.

Given the unexpected Detroit Three production push in November, LMC Automotive has increased its volume outlook for 2013 North American production to 16.2 million units. First quarter 2014 production is expected to grow 4.2 million units, a 4% increase compared with the same period in 2013. Full-year production in 2014 is forecast at 16.6 million units, which is a 3% increase from 2013.

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