Selling Rate Pulls Back, Recovery Expected
Sales slowed, but two market research firms said the industry will deliver 1.135 million units in April, an 11 percent increase from a year ago.
WESTLAKE VILLAGE, Calif. — New-vehicle retail sales in April are expected to continue the year-over-year growth trend from the first quarter, as the market heads into the spring selling season, according to a monthly sales forecast developed by J.D. Power and Associates’ Power Information Network® (PIN) and LMC Automotive.
April new-vehicle retail sales are projected to come in at 894,100 units, which represents a seasonally adjusted annualized rate (SAAR) of 10.2 million units. Volume is expected to increase by 8 percent, which is consistent with the year-over-year increase of 8 percent in the first quarter.
“The daily selling rate in April is projected at 37,000 units, which is higher than the 34,000-unit average in the first quarter,” said John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates. “While April is typically a challenging month to draw comparisons with because the Easter holiday some years falls in April and other years in March, the signs of sustained growth are evident.”
Industry sales growth has been concentrated in non-luxury vehicle segments. Luxury segments share of industry retail sales in April to date is 10.8 percent, down from 12.1 percent in April 2011.
“Despite the slip in market share for the luxury market, growth in overall sales is offsetting the risk to sales volumes,” said Humphrey. “That’s not to say there aren’t risks. Improved content and features in non-luxury vehicles offer good value proposition for consumers returning to the marketplace. In addition, there are a number of new and refreshed non-luxury models, and programs such as free maintenance provide consumers with a lower total cost of ownership.”
The decline in luxury share of retail sales is one of the reasons why lease penetration is down in April, as the luxury market typically has a higher lease penetration than the non-luxury market. Through the first 15 selling days in April, lease penetration overall is 17.7 percent — the lowest level since December 2009 and down from 20.2 percent in April 2011.
Total light-vehicle sales in April are expected to come in at 1.135 million units, an 11 percent increase from April 2011. A higher fleet mix continues into April, with fleet volume expected to represent 21 percent of total sales.
Based on the robust first quarter 2012 selling pace, which was 14.5 million units total and 11.7 million units retail, LMC Automotive is raising the light-vehicle sales forecast for the full year. The current forecast is now at 14.3 million units total light vehicles (up from 14.1 million units) and 11.5 million units retail light vehicles (up from 11.4 million units). An increase in fleet sales to 20 percent of total sales for the year is expected to outpace the increase in retail volume for 2012.
“Despite the lower selling rate in April, which was expected, we have raised our overall outlook for 2012 based on the high first quarter pace, improving economic variables and credit availability, as well as consumers replacing aging vehicles at a higher rate,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “However, automotive sales remain vulnerable, as the market faces yet another potential shock due to a fuel and brake line resin shortage caused by a plant explosion in Germany in March.”
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