Like The Temperature, Sales Are A Tad Warmer

autosales

After a gelid January and February for auto sales, March will warm up just a bit, but no more than the actual weather has. Automotive market observers see a relatively flat March versus the month last year, though it will be much better than last month, not surprisingly, as people typically start visiting showrooms in the spring. 

Jesse Toprak, chief analyst for Cars.com, says retail sales will be up around 2.3% versus March last year. Kelley Blue Book is seeing about the same percentage increase. Last week J.D. Power saw a much healthier 7% improvement versus last year.

“Following two months of weaker-than-expected sales, the industry should start to bounce back in March,” said Alec Gutierrez, senior analyst for Kelley Blue Book.  “The momentum built in March should set the market up for a big month in April."  He said higher incentives will bring people in. 

Even with March stronger than February, which is always the case as the winter's rime starts to loosen up and people wander out of their caves, the first quarter overall is lower than expected. But, says Toprak, "Despite the rather stagnant pace of sales, we should keep in mind that the fundamentals for the industry are still sound. 

Cars.com predicts Chrysler will be the big gainer this month, up 9.4% for the quarter, and 8.2% versus the month last year. And they predict Nissan also strong for the first quarter, up 7%. Besides Chrysler benefitting in March,  Ford, GM, Honda, and Toyota will see improved sales. 

"I think across the board when you look at everything they sell, [Chrysler Group's] strength is with Jeep” says Toprak. “Just about every model is doing well for Jeep. And in trucks, Ram is also strong." 

Truck demand is likely to stay strong, per Toprak, who argues that even though the initial wave of post-recession pent-up demand has been sated,  there are still lots of people and a lot of small businesses waiting in the wings. "The biggest wave of small businesses coming back to buy trucks this year is yet to come." But he adds that there are too many trucks waiting on lots. "The  inventory numbers for trucks are at 120 days of supply or more, with Chevrolet Silverado at 150 days. Normally up to 100 days of inventory is acceptable," he says. Ford will be coming to market with its new F-150, which should drive a lot of volume. 

This year luxury will also drive demand, as the market will see a spate of new performance cars, including the return of Alfa Romeo, the 2015 Mustang, Corvette (Chevrolet has just announced it will offer a two-day performance driving school to owners), as well as the new Cadillac Escalade, Mercedes-Benz GLA and C-Class, and BMW's i8, hybrid, which is sold out, per Toprak. 

BMW, meanwhile is about to vastly ramp up its U.S. production. The company on Friday announced it will invest $1 billion in its Spartanburg, S.C., plant, which makes several vehicles for the U.S. and global market. The investment will increase capacity there to 450,000 cars per year, per Norbert Reithofer, BMW Group chairman, speaking at an event at the plant. He said the additional volume there will make that 20-year-old facility the largest in its global production network.

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