WESTLAKE VILLAGE, Calif. — The new-vehicle retail selling rate in January is expected to decline compared with both December 2009 and one year ago, according to J.D. Power and Associates, which gathers real-time transaction data from more than 8,900 franchisees across the United States.

January new-vehicle retail sales are expected to come in at 500,900 units, which represents a seasonally adjusted annualized rate (SAAR) of 7.9 million units, compared with 8.8 million units in January 2009. This month’s selling rate is down from 8.9 million units in December 2009 — one of the stronger sales months in 2009, in part due to robust marketing and incentive programs.

“January is typically a weak selling month, but this month is particularly impacted by December’s strong close and extra selling weekend,” said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. “However, the sales pace has been improving as January continues, which is an encouraging sign for the recovering industry.”

Fleet sales are expected to increase substantially from January 2009, which marked the lowest fleet level last year. As a result, total sales for January 2010 are projected to come in at 659,000 units, up 9 percent from January 2009. The January SAAR for total light-vehicle sales is expected to increase to 10.1 million units, compared with 9.6 million units one year ago.

J.D. Power and Associates U.S. Sales and SAAR Comparisons – January 2010

¹ Figures cited for January 2010 are forecasted numbers based on the first 11 selling days of the month.
² The percentage change is adjusted based on the number of selling days (24 days vs. 26 days one year ago).

J.D. Power and Associates is maintaining its 2010 forecast at 11.5 million units for total sales and 9.5 million units for retail sales. However, with improved leasing availability, loosening credit and healthier economic conditions, the industry’s recovery could be more pronounced.

Vehicle inventory is currently at a 53-day supply, compared with 94 days in January 2009. The improved inventory level, combined with growing demand, is leading to increases in North American vehicle production in the first quarter of 2010. Production is expected to increase by nearly 70 percent to 2.8 million units during the first three months of 2010, compared with 1.7 million units during the same period one year ago.

“While North American production remains well below historic levels, the near-term boost will provide much-needed support to the automotive supply base,” said Schuster. “Year-over-year increases are expected to continue throughout 2010, resulting in a projected 2 million-unit increase, compared with 2009 levels.”

Initial results for December auto sales indicate the industry may be headed toward recovery, as Chrysler, Ford, Mercedes-Benz and Subaru all reported month-to-month increases in December.

On a year-over-year basis, Chrysler, Ford and Mercedes-Benz all experienced declines in volume, while Subaru reported a record-breaking year with a 15 percent increase in sales.

The uptick in December sales falls in line with forecasts made by analysts at J.D. Power and Associates and Edmunds.com.

Analysts at J.D. Power and Associates forecasted that December’s new-vehicle retail sales would hit 839,600 units, which represent a seasonally adjusted annualized rate (SAAR) of 9.1 million units.

Analysts at Edmunds.com forecasted December total sales to hit 1.01 million units, a 13.3 increase from the year-ago period. They also predicted that December’s seasonally adjusted annualized rate (SAAR) would be 11.11 million, up from 10.89 million in November 2009.

“We could potentially reach a December SAAR of 11.7 million units given the current site traffic trend,” noted Edmunds.com Senior Analyst Jessica Caldwell. “Our Website activity is through the roof, which makes sense as there are so many bargain-hunters scrambling to get year-end deals and cash in on the sales tax deduction opportunity that expires on December 31.”

While Web traffic was up across the board for manufacturers, Edmunds.com said some brands experienced better than average interest in the last four days of the year compared with the first three weeks of December. Here are some examples:

• BMW – Increase of nearly 70 percent; may be due to heavily publicized “BMW Joy Sales Event.”
• Chevrolet – Increase of nearly 85 percent; may be due to “Red Tag” event that includes “Holiday Cash.”
• Ford – Increase of nearly 100 percent; may be due to “Ford Year-End Sales Event.”
• Honda – Increase of nearly 100 percent; may be due to increased advertising of “Happy Honda Days.”
• Pontiac – Over ten times as much activity; may be due to media hype about close-out deals.
• Saturn – Nearly ten times as much activity; may be due to media hype about close-out deals.

December new-vehicle retail sales are expected to increase substantially compared with one year ago, indicating the continuation of the industry’s recovery, according to J.D. Power and Associates.

December new-vehicle retail sales are expected to come in at 839,600 units, which represent a seasonally adjusted annualized rate (SAAR) of 9.1 million units. Although fleet sales have been rebounding from historic lows earlier this year, December’s fleet level is projected to be down 10 percent from one year ago. As a result, total sales for December are projected to come in at 1,029,600 units, up 7 percent from December 2008.

“The market is continuing to improve, with the relative strength of December sales supporting a year-end rally,” said Gary Dilts, senior vice president of global automotive operations at J.D. Power and Associates. “The December selling rate is tracking at 11.2 million units—up nearly 1 million units from one year ago—which sets up 2010 for further recovery.”

On the heels of the worst economic environment since the Great Depression, the automotive market has recovered from its low point in March 2009, and has been outperforming expectations since October. Given the more robust pace and a strong December close, 2009 is projected to come in higher than previously expected, with total sales at 10.4 million units and retail sales at 8.7 million units.

“While the industry hasn’t yet received a clean bill of health, fixed costs have been trimmed at all levels, allowing for profitability—even at a reduced selling rate,” said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. “The industry has an opportunity in 2010 to build on a series of small victories—such as improved pricing and appropriate inventory levels—to drive a stronger recovery.”

J.D. Power and Associates is maintaining its 2010 forecast at 11.5 million units for total sales and 9.5 million units for retail sales.