Auto sales in the U.S. expected to stay strong despite rising fuel prices

Article by Christian Andrei, on February 26, 2013

Many analysts and forecasters said that even with increasing fuel prices and the possibility of new government spending cuts, auto sales in the U.S. would stay strong. For the month of February, LMC Automotive predicted a seasonally adjusted annualized sales rate of 15.2 million. LMC Automotive, the forecasting partner of J.D. Power and Associates, based its predictions on the first 14 days of the month.

Because of the improvements in the U.S. economy, LMC increased its full-year estimate by 200,000 units to 15.3 million light vehicles. Last year, U.S. sales increased by 13% to 14.5 million units as the industry continued to recover from its recession worst of 10.4 million posted in 2009. Jeff Schuster, the top auto forecaster of this company, said that auto sales are strong because of more positive factors this year such as the expectation of a housing recovery, additional new-model launches and more vehicles coming off lease.

Carmakers intend to divulge the sales results of February on March 1. John Humphrey, J.D. Power’s senior vice president of global automotive practice, said that the auto industry right now is healthy. In a statement, Humphrey said that the average transaction prices are higher and incentives are stable. He added that the level of leasing is presently at a sufficient level and that the market continues to feel the impact of newly designed models.

According to Edmunds.com, February volume is estimated to be at 15.5 million on a seasonally adjusted annualized sales rate basis. In a statement, Edmunds analyst Jessica Caldwell said that auto sales are “persevering” even when consumers are worried about financial factors such as increasing gas prices and the imposition of the payroll tax. Among the positive factors he mentioned are pent-up demand and available credit. This would be the fourth consecutive month that its sales pace would be higher than 15 million, a trend that marks the first in the industry in the last five years.

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