WESTLAKE VILLAGE, Calif. — New-vehicle salesremain strong in March, as both the light-vehicle retail selling rate and the total light-vehicle rate are consistent with February’s performance at 12.1 million units and 15.3 million units, respectively, according to J.D. Power and Associates’ Power Information Network (PIN) and LMC Automotive.

March new-vehicle retail sales are expected to come in at 1.158 million vehicles — represent a seasonally adjusted annualized rate (SAAR) of 12.1 million units — with volume approaching a double-digit increase from March of last year.

The two firms also noted that the average new-vehicle transaction price ($28,504) rose 3 percent from March 2012. Leases account for 23.1 percent of new-vehicle retail transactions in March 2013, up from 20 percent in March 2012.

In addition, the percentage of retail sales with a 72-month or longer loan is at record levels, reaching 32.1 percent in March 2013, an increase from 30.4 percent in March 2012.

U.S. Retail SAAR—March 2012 to March 2013

“While longer loan terms have traditionally been a cause for concern to the industry due to the risk of purchase cycle extension, it is not necessarily as daunting as it may seem.” said John Humphrey, senior vice president of the global automotive practice at J.D. Power and Associates. “The longer loans are being offset by more leasing and the low interest environment, which means that consumers are able to put more of their monthly payment towards their loan principal rather than interest fees.”

Humphrey also notes that strong used-car values mean that consumers have more equity in their trades and can finance lower amounts. In addition, consumers who may have been shut out of the market in recent years are finding that a longer loan makes buying a new vehicle affordable.                                                            

Total Light-Vehicle Sales

Total light-vehicle sales in March are projected to reach 1.465 million units, an 8 percent increase from March 2012. Fleet share is expected to hold at 21 percent.

J.D. Power and LMC Automotive U.S. Sales and SAAR Comparisons

¹Figures cited for March 2013 are forecasted based on the first 14 selling days of the month.

²The percentage change is adjusted based on the number of selling days in the month (27 days in March 2013 vs. 28 days in March 2012).

Sales Outlook

The outlook for 2013 remains strong and consistent with the pace expected to be set in the first quarter. LMC Automotive is holding its 2013 U.S. forecast for total light-vehicle sales at 15.3 million units and the retail light-vehicle forecast at 12.5 million units.

“Building on the current performance, we expect the economic environment to improve throughout 2013, as the likelihood of a dark cloud slowing the recovery pace diminishes,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “Consumers do not appear phased by headwinds from Washington, as growth in auto sales are outperforming earlier expectations.”

North American Production

Vehicle production in North America is up three percent through February 2013, compared with the same period in 2012. Production of models in the compact segment is outpacing the total market, up seven percent thus far in 2013. Production of vehicles in the midsize and large segments has increased 1 percent and likely will hold in a slower growth position as General Motors readies the ramp-up of its redesigned large pickups. Production of compact cars and compact premium CUVs is up 15 percent in the first two months of 2013, driven by the addition of the Dodge Dart, Nissan Leaf and the redesigned Acura RDX.

Vehicle inventory levels in early March increase to a 64-day supply, compared with 74 days in February. Overall, there are nearly 3.2 million units currently available on dealer lots or in transit — an increase of approximately 600,000 units from March 2012. Both car and truck inventories have dropped approximately 10 days from last month. Cars began March with a 61-day supply and trucks with a 68-day supply.

LMC Automotive's forecast for North American production remains at 15.9 million units for 2013, an increase of three percent from 2012.

"While there is a significant amount of activity below the topline production in 2013—from more than 50 new-model ramp-ups to reduced exports to Europe — the underlying trend remains positive and on target for 2013 to improve from 2012,” said Schuster.