March could be just the sixth month since 2009 in which the U.S. auto industry posts a year-over-year sales decline, a sign the market is starting to flatten out after one of the longest stretches of growth ever. Given how close volumes are tracking with the same month a year ago, whether March results finish up or down will likely hinge on how many deliveries dealers can make between now through Tuesday.
Analysts said 2015 remains on track to meet their forecasts of about 17 million units, and that Fiat Chrysler Automobiles likely will stretch its streak of consecutive monthly gains to five full years, though just barely.
February 2014 marked the last month that industry sales slipped year over year.
TrueCar estimates March sales will fall 0.8 percent. Kelley Blue Book projects a 0.3 percent dip, while LMC Automotive expects an increase of 0.3 percent. Barclays Capital analyst Brian Johnson said he thinks sales will fall 1.6 percent, but a strong final week might result in a slight gain for the month.
“Spring has officially sprung, but much of the country is still pushing away snow piled up at the doorstep,” Eric Lyman, vice president of industry insights for TrueCar, said in a statement. “Given what a strong month last March was, this slight decline in total volume isn’t surprising. We’re bullish on the retail outlook for the second half of the year, and the industry remains on track to reach TrueCar’s 17 million-unit projection for 2015.”
The forecasts translate to a seasonally adjusted, annualized sales rate of 16.8 million to 17 million units, up from 16.2 million in February and 16.5 million a year ago. February sales came in softer than expected as winter weather deterred showroom traffic in some regions during the last week of the month.
Automakers will report March sales results on Wednesday.
KBB analyst Alec Gutierrez said the bounceback this month is “less pronounced” than a similar weather-induced pattern a year ago because this March has one fewer weekend to make up for those lost February sales.
But while weather isn’t helping sales, the strengthening economy is. New home sales hit a seven-year high in February, the Consumer Price Index rose 0.2 percent after declining for three months in a row, and unemployment is down.
Michigan’s unemployment rate has fallen below 6 percent for the first time in 14 years, which is both good news for dealers there and a sign of how strong light-vehicle production has been.
Thanks to those and other factors, the industry’s average transaction price in the first part of this month rose to $30,530, the highest level ever for March, according to J.D. Power. Another reason for that: loans with terms of at least six years have accounted for more than 35 percent of retail sales so far this month, which would be a record if that pace keeps up.
Excluding fleet deliveries, LMC estimates retail sales to reach the highest level for any March since 2002, growing 0.2 percent -- or by just 2,795 vehicles -- from a year ago.
“The U.S. continues to be one of the brighter spots in the global vehicle sales picture in 2015 with stable volume growth,” Jeff Schuster, LMC’s senior vice president of forecasting, said in a statement.
Incentive spending has decreased 0.4 percent from last month and 1.3 percent from March 2014, according to TrueCar, showing that most automakers aren’t trying to buy additional share as the market levels off.
However, TrueCar said incentives are up double digits from a year ago for both Toyota Motor Sales and Hyundai-Kia Automotive.
“This and steady demand for light trucks means automakers can expect continued revenue gains,” Lyman said.
Among major automakers, only Subaru is expected to post a double-digit increase in deliveries this month, TrueCar said.
TrueCar and KBB estimate that sales will be up about 4 percent for Toyota and American Honda, flat for General Motors and down about 5 percent for Ford Motor Co. Both forecasters expect Nissan North America to lose U.S. market share, with TrueCar projecting that Nissan will drop below Honda.
The forecasts call for sales at Fiat Chrysler to rise about 1 percent, which would mark its 60th straight month of year-over-year increases.
The company and its dealers no doubt want to avoid letting the streak die at four years and 11 months, which may be why it’s the only one of the Detroit 3 whose incentives have risen from March 2014, according to TrueCar’s data.