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2013 Car Sales Off to Good Start

January likely to see strongest demand in five years.

by on Jan.28, 2013

If anything, automakers are facing challenges keeping up with demand for products like the new Ford Escape on an assembly line in Louisville.

New car sales are off to a strong start in January as the industry’s retail sales rate moves to its best level in five years, according a monthly sales forecast from J.D. Power and Associates’ Power Information Network and LMC Automotive.

January new-vehicle retail sales are expected to come in at 812,600 vehicles, which would represent a seasonally adjusted annualized rate, or SAAR, of 12.9 million units, and well ahead of the expected 12.4-million-unit annual level for 2013. Retail transactions are the most accurate measurement of true underlying consumer demand for new vehicles.

Adding in fleets demand, the estimated SAAR for January could hit 15 million units, considerably higher than the 13.9 million sales pace in January, 2012 though slightly off the 15.2 million rate last month, December giving an unexpected boost as the industry launched into the New Year.

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“The year is off to a fast start, which bodes well for the remainder of 2013,” said John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates. “Building on the momentum the industry has been gaining over the past two years, sales remain on a trajectory to return to pre-recession levels within the next few years.”

Other forecasters echoed that sentiment, suggesting that 2013 will get off to a good start in spite of – or even because of – some recent challenges.

“January’s numbers show that vehicle sales stayed strong, even after the holiday ads faded away and the replacement sales following Hurricane Sandy started to dry up,” says Edmunds.com Senior Analyst Jessica Caldwell. “These results certainly reinforce the exuberance and optimism that filled the air…at the North American International Auto Show in Detroit.”

Edmunds is also predicting significant year-over-year sales increases for major automakers in January.

Total light-vehicle sales in January 2013 are projected to reach 1,027,700 units, an 8% increase from January 2012. Fleet share is expected to dip to 21%, considerably lower than the 25% share in January 2012, signaling continued discipline in the industry-related rental car fleet market.

The brisk sales paces is also prompting carmakers to raise production, while the overall inventory levels have fallen back to near normal mark.

Based on a strong finish in 2012 and a higher-than-expected pace to begin 2013, LMC Automotive is increasing its 2013 U.S. forecast for total light-vehicle sales by 100,000 units to 15.1 million. In addition, the outlook for retail light-vehicle sales increases to 12.4 million units from 12.2 million units for 2013.

“The global industry is looking for the United States to offset risk in Europe and potentially slower growth in the emerging markets in 2013,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “The good news is that the U.S. market is primed to over-deliver as the recovery heats up. The concern now is shifting from the continuing recovery to whether the automotive supply base will be able to keep up with hearty demand,”

North American light-vehicle production was 15.4 million units in 2012, 18% higher than in 2011, marking the first time since 2007 that North American production has surpassed 15.0 million units.

Vehicle inventory returned to an ideal level in early January with a 59-day supply, compared with 69 days in December. A strong sales pace in November and December 2012, coupled with the holiday production shutdown period in late 2012, drove inventory down to the current level. Overall, there are approximately 3.1 million units currently available on dealer lots or in transit—an increase of about 600,000 units from January 2012.

Schuster said LMC Automotive expects 2013 North American production to be 15.9 million units in 2013, a 3% increase from 2012, with further upside potential contingent on the pace of demand in the first half of the year. For 2014, the North American production forecast is expected to increase to 16.6 million units.

“With inventory in check and demand remaining strong, all indications suggest that production levels—and automotive supplier profits—will be at a high pace during 2013 for North America,” Schuster said.

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3 Responses to “2013 Car Sales Off to Good Start”

  1. Sidney says:

    1/28/13-from the Mayan calendar of predictions-

    “2012 Car Sales Off to Good Start”.

    Good to know. :)

  2. Jorge M. says:

    I think the story title and tags is suppose to say Jan. 2013, not 2012, sales off to good start?

  3. Paul A. Eisenstein says:

    Mea culpa, mea culpa. I posted this at 4:30 AM to make an event in Texas. My brain runs a year behind that to e of morning!

    Paul E.