US Auto Sales for February are stronger than expected

“There was some surprise on the upside; the industry has done a little bit better than expected,” said Jeff Schuster, executive vice president of Automotive at GlobalData, LMC Automotive’s parent company. “However, 15 million SAR does not light the world with fire.”

The supplier disruptions that roiled the industry last year “are still there, but they’re pretty much back from where they were,” Schuster said. He also noted that strong fleet demand more than offset any decline in consumer demand at the retail level.

“As we saw in January, things are still picking up strength and we are seeing availability increase” as inventory levels recover, said Tyson Jomini, vice president of data and analytics at JD Power.

“Demand remains very strong. Deal prices hit a record high for February – up another 5 percent to over $46,000,” Jomini said.

He added that traders were still able to maintain their pricing power, albeit in a modestly reduced form. He noted that about 31 percent of retail sales in February were above sticker price, indicating that strong consumer demand continues to outpace supply. However, that number is about half of what it was during the summer, he said. “Automakers won’t start stimulating sales until that number is very close to zero, or at least in the single digits. So things are going in the right direction, but it’s still not there.”

In fact, J.D. Power set average February stimulus per new car at $1,335 in February, up from $1,275 a year earlier, while stimulus spending as a percentage of the sticker average was roughly flat year-over-year. at 2.8 percent, down 0.1 percentage point. TrueCar estimates that incentives fell by $135 from February 2022 to $1,522 last month but are up 9 percent from January’s level of $1,396.

Schuster said he expects incentives to rise slowly this year as manufacturers walk a fine line trying to balance plant utilization rates while avoiding overburdening dealers with inventory.

“I think we’ll start to see the stimulus creep in again, but it could take a few months,” Schuster said. “We’re going to see more of a balance between automakers and the discipline of not overbuilding. But that balance means that manufacturers are likely to start getting consumers to come back; I don’t think tomorrow, but certainly within the next six months.”