Sales of new vehicles continued to stall out during February, mostly due to the lack inventory on dealer lots.
With consumers walking away — turning to the used vehicle market, in some cases — new vehicle sales in February are expected to reach 1.08 million units, a drop of 11% compared to February 2021, according to a forecast released by Cox Automotive.
The February pace of U.S. auto sales, or seasonally adjusted annual rate (SAAR), is forecast to show a market still significantly constrained by lack of new-vehicle supply and finish at a relatively anemic 14.4 million vehicles.
That result is a drop from January’s 15-million-unit pace, and down from last February’s 15.9 million level, Cox reported. The decline in pace is not due to seasonal adjustments, but rather a tight supply situation that continues to hold back the market, the Cox report said.
Cox noted new vehicle sales volume has been averaging just over 1.05 million each month since last August, and this February is not expected to buck the trend. Inventory levels are not showing significant improvement.
New vehicle inventory is now 62% below last year’s level, and available data shows that available supply declined last week after rising for many weeks.
J.D. Power and LMC Automotive said retail sales of new vehicles this month are expected to reach 922,100 units, a 5.7% decrease from February 2021.
Total new vehicle sales for February 2022 are projected to hit 1,057,300 units, an 11.1% decline compared to year-ago numbers, according to Power and LMC analysts, who estimated the SAAR for February is 14.1 million units.
Soft sales to continue into the spring
Thomas King, president of the data and analytics division at J.D. Power, noted with retail inventory on pace to finish a fourth consecutive month below 900,000 units and ninth consecutive month below one million units, the new-vehicle supply situation is not displaying signs of near-term improvement.
“Sales in February are being determined by the number of vehicles delivered to dealerships rather than reflecting actual consumer demand,” King said.
Charlie Chesbrough, senior economist at Cox Automotive, said the current situation could continue throughout the spring.
“With low supply and low sales volume, and no tangible market change expected, a big decrease in the sales pace — a sizable drop in the SAAR — is likely in the offing for next month,” he said.
“In the winter, when low sales volumes are expected, seasonal adjustments can result in a relatively strong SAAR, as we have in January and February. But come spring, when sales are expected to be much higher, the SAAR will look particularly weak. Without a big jump in inventory, March’s SAAR is going to show a significant decline.”