Friday, March 23, 2012IRVINE, Calif. -- Sales of new vehicles in March are projected to reach 1.425 million units, or 14.6 million seasonally adjusted sales rate. This is a 24% gain from last month and a 14% gain from March 2011.
At more than 1.4 million units, sales will be the highest for any March since 2007, when industry sales topped 1.5 million units overall, according to an analysis by Kelley Blue Book. March traditionally is a strong month as consumers cash in their tax refunds and head to dealerships for the latest model-year vehicles. Kelley Blue Book expects this March will be especially strong due to high consumer demand for fuel-efficient models and interest in popular redesigns such as the Toyota Camry, along with improving supply conditions and attractive finance opportunities.
In Kelley Blue Book's fourth quarter 2011 consumer sentiment survey on kbb.com, 29% of respondents complained about a small selection of vehicles, while an 28% responded that they had difficulty finding the specific vehicle they wanted. Kelley Blue Book expects many consumers who delayed vehicle purchases due to a lack of selection will buy in March as inventory conditions continue to improve. An abundant supply of new vehicles also will help entice used-car shoppers to consider a new vehicle, especially with late-model used-car values increasing at a rapid pace alongside high fuel prices.
Rising fuel prices could slow down the current momentum in sales growth if left unchecked, so this will be a key factor to monitor moving forward, said Alec Gutierrez, senior market analyst of automotive insights for Kelley Blue Book.
A recent Kelley Blue Book survey found that 51% of respondents are considering a smaller, more fuel-efficient vehicle, while 20% are considering an alternative-fuel vehicle such as a diesel or hybrid.
"Subcompact car sales will be especially strong, since they are the most affordable vehicles in the marketplace today," Gutierrez noted. "Not only are they cost effective, but the subcompacts available for sale today are of significantly higher quality than those offered just a few years ago. The Ford Fiesta, Hyundai Accent and Chevrolet Sonic are new introductions that are reshaping the segment, while consumers also can look to traditional segment leaders such as the Honda Fit, Toyota Yaris and Nissan Versa for something more familiar."
The Toyota Prius c is another small vehicle to watch, he said. Demand for this hybrid vehicle has been white-hot since its introduction earlier this month. Pricing starts below $20,000 and offers 53 mpg.
Toyota and Honda regained market share steadily during the past several months, a trend that's expected to continue in March. After hitting a low point of 10.2% and 7.6% market share, respectively, in mid-2011, Toyota and Honda accounted for 13.9% and 9.6% of all February sales, significantly above their 2011 lows. Inventory levels have continued to climb steadily in recent months and as a result, Kelley Blue Book expects both brands to continue gaining market share in the months ahead.
Published by The Business Journal, Youngstown, Ohio.