A drop in fleet sales appears to have cut total new-vehicle sales by 3.7% in February when adjusted for selling days, analysts claim.
Reporting the same numbers without adjusting for the number of selling days translates to a decrease of 11.1% from February 2020. Additionally, the seasonally adjusted annualized rate or SAAR for total new-vehicle sales is expected to be 16 million units, down 0.9 million units from the year-ago period, according to estimates from J.D. Power and LMC.
Thomas King, president of the data and analytics division at J.D. Power, notes despite challenges posed by inclement weather in most of the country, retail sales demand continues to be strong with the industry posting a second consecutive month of year-over-year gains on the retail side of the business.
“Typically, weather related sales disruptions are made up in the weeks following, so most of the sales lost at the beginning of February will be made up at the end of February and trail into early March,” King adds.
Retail sales results strong
Even with tight inventories, retail sales for new vehicles are expected to rise 3.3% compared with February 2020 when adjusted for selling days, King adds.
“The combination of strong retail sales, higher transaction prices and smaller discounts means that February 2021 likely will be one of the most profitable Februarys ever for both retailers and manufacturers,” King predicts.
“As February results will show, while inventories are lean, there is still enough inventory to maintain positive sales growth in the near term.”
Potential problems loom
However, the lingering risk to the current retail sales pace for the balance of the year is supply chain disruption, he says.
“Lean inventories mean that vehicles are selling quickly once they arrive at dealerships – and they are selling with lower discounts. The average number of days a new vehicle sits on a dealer lot before being sold is on pace to fall to 53 days, down 18 days from last year,” King said.
The average manufacturer incentive dropped $614 from a year ago. Expressed as a percentage of the average vehicle manufacturers suggested retail price, incentives for February 2021 are 8.2%, down two percentage points from a year ago. Retailers also continue to offer smaller discounts on new-vehicle sales, according to King.
