• by Karl Greenberg , February 23, 2012

February is looking stronger than January for new-vehicle sales. Prognosticators say sales will improve at least 5% versus February last year. J.D. Power & Associates’ Power Information Network (PIN) and its LMC Automotive unit predict February new-vehicle retail sales will be 857,400 units, a seasonally adjusted annualized rate (SAAR) of 12.0 million units, which is more than a million-unit increase in the selling rate from January 2012.

“Retail light-vehicle sales in February are strong, which makes us modestly optimistic about the growth of sales going forward,” said John Humphrey, SVP of global automotive operations at J.D. Power & Associates, in a statement. He added that market fundamentals will support continuing strength through the year.

Consumer auto shopping and research site Kelley Blue Book/kbb.com projects new-vehicle sales to surpass 1.05 million units and reach a 13.8 million SAAR for February, which would be a 6.4% improvement over February last year. 

The firm says much of that will be driven by higher inventory levels, better access to credit, finance offers and the additional selling day because of the leap year. Kelley Blue Book believes the annualized sales pace will slow after April, as pent-up demand is satisfied from Toyota and Honda’s inventory shortfalls. 

“From a pure volume perspective, in the months ahead sales will continue to exceed last year’s figures, but this year there may be more volatility from month to month than in 2011,” said Alec Gutierrez, senior market analyst of automotive insights for KBB.  “Sales were remarkably flat from May through November 2011, due to the production woes faced by Toyota and Honda.  Now that they are producing vehicles at full capacity, a return to traditional seasonal patterns is likely through 2012.” 

If KBB's predictions hold true, Chrysler will post yet another big month, showing the greatest gains of any automaker. With the exception of General Motors, KBB projects all automotive manufacturers to post year-over-year sales gains in February. 

“The Chrysler 200 didn’t sell in significant volume until March 2011, so Chrysler’s growth should level off beginning next month,” said Gutierrez. “Later in the year, Chrysler should experience another boost with the launch of the all-new Dodge Dart, a much-needed entrant into the already competitive compact segment. Strong sales are expected in the compact and subcompact categories, especially as fuel prices continue to rise.”

The firm says General Motors' declines will be driven by big decreases in incentive spending. KBB says GM incentives were down 16% in January. 

Last year saw the first plug-in hybrid and all-electric consumer cars come to market. One firm, ABI Research, says there isn't likely to be a big burst of hybrid or electric vehicle sales, the market will see steady growth over the next eight years.

Some of that demand will be artificial as government incentives and increasingly stringent emissions regulations drive the market. In particular, major cities are providing a great deal of support for electric and plug-in hybrid vehicles by subsidizing the installation of public recharging infrastructure and offering discounted or free parking and other benefits.

It also helps that gasoline prices seem to be heading up again. This week oil topped out at $106 per barrel, meaning $4 gasoline isn't unlikely in the very near future.

“Fuel cost has a major part to play in the growth of the HEV market,” said ABI group director Dominique Bonte. “Initial purchase cost remains a barrier to large sales numbers, but if fuel cost was to rise significantly, then the payback period would get much shorter and demand would rise. Note that if this happens in the short term, there might be issues ramping up production.”