Though total light vehicle sales are down nearly 20% in April versus March this year, they remain 11% higher than the same period in 2011, providing confidence that sales will remain strong heading into the second quarter of 2012.
“The daily selling rate in April is projected at 37,000 units, which is higher than the 34,000-unit average in the first quarter,” said John Humphrey, senior VP- global automotive operations with J.D. Power and Associates. “While April is typically a challenging month to draw comparisons with because the Easter holiday some years falls in April and other years in March, the signs of sustained growth are evident.”
“Despite the lower selling rate in April, which was expected, we have raised our overall outlook for 2012 based on the high first quarter pace, improving economic variables and credit availability, as well as consumers replacing aging vehicles at a higher rate,” added Jeff Schuster, senior VP-forecasting at LMC Automotive.
However, he also expressed concern that the recent explosion and subsequent shutdown of a key resin-making plant in Germany could crimp global automotive production capability – and for an unknown length of time.
“Automotive sales remain vulnerable, as the market faces yet another potential shock due to a fuel and brake line resin shortage caused by a plant explosion in Germany in March,” Schuster explained. “[Thus] real and substantial risk exists for future production and automotive manufacturers may begin to slow the pace of build that has been in overdrive in recent months. More intensive production management in relation to product mix and inventory is expected to be a means to cope with the looming shortage.”
J.D. Power noted that total light-vehicle sales in April are expected to come in at just over 1.13 million units, which is an 11% increase from April of last year. A higher fleet mix continues into April, with fleet volume expected to represent 21% of total sales.
Based on the robust first quarter 2012 selling pace, which was 14.5 million units total and 11.7 million units retail, LMC Automotive is raising its total light-vehicle sales forecast to 14.3 million units from 14.1 million units, boosting its retail light vehicle sales expectations to 11.5 million units from 11.4 million units. An increase in fleet sales to 20% of total sales for the year is expected to outpace the increase in retail volume for 2012, the firm said.
LMC added that North American light-vehicle production through the first quarter of 2012 is up nearly 17% compared with the same quarter in 2011 – although Schuster again cautioned that the level of impact caused by the resin shortage is not yet known, and thus will restrain any further increase in North American production levels.
LMC’s data indicates almost 570,000 additional light vehicles were built this year through March versus the same period last year, with increased volume in the U.S. driving the year-to-date growth of 21% versus the same period in 2011.
North American production in the second quarter is expected to increase nearly 20% from last year should the resin supply issue be dealt with successfully, with more than 3.6 million units expected to be built, according to LMC’s forecast. Yet the firm noted that comparison must also account for the supply disruptions caused by the massive earthquake and tsunami that struck Japan in March 2011; an event which significantly affected automotive production capabilities worldwide last year.
Finally, LMC noted that light vehicle inventory declined slightly to a 54-day supply at the beginning of April compared with a 57-day supply at the beginning of March. Car inventory is at below-normal levels with a 44-day supply in early April, down from 48 days in March, while light truck inventory levels remain unchanged at a 66-day supply level.