March 2014 US sales seen to underperformed as demand remains scant

Article by Christian Andrei, on March 25, 2014

While the chilling weather is starting to go away in March, it does not seem that shoppers are coming to dealerships yet. Patrick Farrell, a salesman at Egglefield Bros. Ford in Elizabethtown, told Automotive News that their March sales are "not good," adding that "the weather hasn't turned yet." That could mean a lot of thing, especially for the first quarter volume and for full year sales.

First of all, forecasters do not see a surge in sales this month that would make first-quarter results look good, especially that January and February volume were deeply hurt by the unusually harsh winter weather that slammed parts of the country. As for places where the weather is warmer and the economy is better, dealers were all smiles. Mike Good, general manager of Street Toyota in Amarillo, Texas, remarked that sales surged 15 to 20 percent in the first half of March. "Our local economy is strong," he said.

"Weather here hasn't been a factor save a couple of dust storms." Despite that, analysts are still concerned about the Seasonally Adjusted Annual Rate for March. "If we're going to reach our expectation of 16.3 million sales for the full year, we need to see a SAAR of 16 million or so in March," remarked analyst Alec Gutierrez of Kelley Blue Book. "Based on the first 14 days, we're closer to 15.6 million." LMC Automotive and J.D. Power and Associates jointly expect a March SAAR of at 15.8 million.

Larry Dominique, executive vice president of TrueCar.com, declined to make a March forecast, but quipped that 13-day sales "aren't as high as a 16 million SAAR." All three forecasters view March figure as a critical test of sales momentum in the US. In 2013, auto sales in the US surged 8 percent to 15.6 million light vehicles, but most analysts expect lower gains this year. Sales in January dropped 3 percent while volume in February was flat – simply because the harsh weather has discouraged shoppers to go dealerships.

However, warmer and better weather should unleash that pent-up demand. If it failed to, carmakers may have to conclude that underlying demand is weaker than expected. This may mean that they cut production and hike incentives to be able to trim the piled up inventories on dealer lots. [source: automotive news - sub. required]

Topics: united states, sales

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