U.S. new vehicle sales recovery continues in January

06 Feb 2012 Tom Libby

The U.S. new car business did well in January. Sales of 913,284 new cars and light trucks were 11% ahead of a year ago. The Seasonally Adjusted Annual Rate (SAAR) was 14.2 million units, its highest level since May 2008 (excluding August 2009 when the Cash for Clunkers program artificially inflated sales). The SAAR has been above 13 million units for five months in a row.

Trends of the last quarter of 2011 carried over to January. Chrysler, Volkswagen, Hyundai and Kia continued to outpace their rivals. Chrysler's corporate new vehicle deliveries surged 44% and the company recorded its twenty-second consecutive month of year-over-year sales increases. Its U.S. market share jumped more than two points to 10.9% as well. Given that Chrysler went through bankruptcy a little over two and a half years ago, the company's results in January and in the prior few months are impressive.

Volkswagen of America was not far behind with a 40% improvement in January, led by 6,318 Passat and 1,401 Beetle deliveries versus virtually none a year ago for both models. Hyundai benefited from 1,683 incremental deliveries of the all-new, idiosyncratic three-door Veloster. A sign of Hyundai's success in this market is that in January it placed two models - Sonata and Elantra - among the 20 most popular models in the industry. Deliveries of Kia's two recently re-designed cars, the Optima and Rio, more than doubled from a year ago.

The large Japanese OEMs also had positive months, though less so than their competitors. Nissan, Honda and Toyota deliveries climbed 10.4%, 8.8% and 7.5%, respectively. Honda's year-over-year rise was its first since last April and was propelled by a 50% surge in deliveries of the re-designed Civic. Toyota dealers delivered 28,295 Camrys in January, 56% more than a year ago and more than any other model in the industry except the Ford F-Series large pickup. As Toyota and Honda inventories return to normal levels, these two companies should regain some lost share; the question is how much.

General Motors, with sales off 6.1%, was the lone major OEM to experience a sales drop in January. All four GM makes suffered declines, with Chevrolet off just 1% but Buick and Cadillac both down more than 20%. GM's U.S. market share slipped to 18.4% from 21.8% a year ago, a major decline. It will be interesting to see if GM aggressively pumps up incentives to boost its share; this could trigger a price war that would benefit the consumer but harm OEM margins.

Percent Change in New Vehicle Sales

In the premium market, Mercedes-Benz recorded an impressive 23% year-over-year improvement to 21,230 deliveries, putting it ahead of arch-rival BMW (16,405 sales) and all other premium makes as the new year starts. In 2011 BMW narrowly edged out Mercedes-Benz to be the most popular premium make in the industry. Lexus continued to struggle in January, with deliveries down 5% to 12,274 units.

Some high-visibility alternative-powertrain vehicles struggled in January. Chevrolet Volt deliveries retreated to just 609 units, down considerably from 1,139 in November and 1,529 in December. GM acknowledges the recent publicity surrounding the Volt has impacted sales, but the company believes the worst is now over. Nissan LEAF sales eased to 676 units, down from 954 in December. Year-over-year comparisons are difficult for these models as they were just ramping up at the start of 2011.

Some January trends indirectly portend well for the new vehicle industry. The economy added 243,000 non-farm jobs in January, and the national unemployment rate decreased to 8.3%. This highly-watched metric has fallen .8 points since August. The stock market has been on an upward path for several weeks as well.

Further, the average age of a vehicle on U.S. roads is now 10.8 years, the highest age since Polk started tracking this measure. Pent up-demand is therefore at exceptionally high levels, and this inevitably translates into new vehicle purchases at some point.

Polk's U.S. forecast for the year remains at 13.7 million light vehicles, a 7% improvement over 2011. January was indeed a strong month, but it is just one month. Also, January had unusually mild weather across much of the nation, which may have pulled ahead sales that would otherwise have occurred in the spring.

Posted by Tom Libby, Lead Analyst - North American Forecasting, Polk (02.06.2012)


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