U.S. new-vehicle sales in April are projected to rise about 4 percent from a year ago, according to four forecasts, easing concerns that the market is weakening.
After falling short of expectations in March, sales are on pace for one of the industry's best-ever Aprils, analysts with LMC Automotive, Kelley Blue Book, TrueCar and Barclays Capital said. But LMC also said it was reducing its full-year forecast for retail sales by 200,000 vehicles to 14.3 million, while keeping its outlook for total sales unchanged.
For April, the analysts said they expect a seasonally adjusted, annualized selling rate of 17.4 million to 17.6 million, which would be roughly in line with January and February. The rate fell to 16.6 million in March, which culminated in a soft Easter weekend.
“April is typically a transitional month wedged between higher-volume March and May, but this year dealerships appear to have benefited from an early Easter that fell in March,” Eric Lyman, TrueCar’s vice president of industry insights, said today in a statement. “It’s reassuring when retail sales grow faster than the overall industry pace as it indicates consumers remain very active and engaged in the new-vehicle market.”
TrueCar said it expects increases of 4 percent for retail sales and 1 percent for fleet sales. But LMC projects retail to rise 3.9 percent and fleet to increase 8.7 percent.
April sales are helped by the calendar in two ways: The month has one more selling day than April 2015 and five weekends, vs. four a year ago. If the forecasts are correct, this would be just the fourth April since at least 1989 in which sales topped 1.5 million vehicles, according to the Automotive News Data Center. LMC’s forecast calls for total sales of 1,523,000 vehicles, which would top the record for the month of 1,504,520 set in 2005.
“We fully expect 2016 auto sales to be another record year in the United States, but there is also no question that we will see a slower rate of growth than in the past few years of recovery,” Jeff Schuster, LMC’s senior vice president of forecasting, said in a statement. “Some retail light-vehicle softening in the past couple of months is partially due to comparisons with robust sales last spring. That said, with volatility comes a shift in expectations to more downside risk than upside potential for this year and next.”
The forecasts show American Honda and Nissan North America achieving the biggest sales gains. Ford Motor Co., Fiat Chrysler Automobiles and Toyota Motor Sales U.S.A. also are projected to show increases.
General Motors, which has been cutting back significantly on fleet sales this year, is expected to lose market share. TrueCar shows GM’s retail sales rising 7.6 percent but total sales down 0.4 percent. Conversely, it projects FCA’s retail sales to fall 1.3 percent while total sales increase 2.3 percent.
TrueCar estimates incentive spending across the industry to be 13 percent higher than a year ago but 2.7 percent lower than March. It shows year-over-year jumps of 25 percent for FCA, 24 percent for Ford, 17 percent for Volkswagen Group of America and 14 percent for GM and Toyota.
The industry’s average transaction price rose to $30,902 in the first half of April, according to J.D. Power, which jointly develops LMC’s forecast. That’s $186 higher than the April record set a year ago, and it means consumer spending on vehicles this month was on track to be $36.9 billion, which also would be an all-time high for April, up from $35.3 billion last year.
Barclays Capital analyst Brian Johnson said transaction prices at mid-April were up 4 percent for large pickups and midsize utility vehicles, compared with declines of 5.5 percent for small cars and 1.3 percent for midsize cars.