The Detroit Three continue expand inventory with a combined days’ supply of 87 days at the beginning of November to 93 at month end.
Despite a slow start, December new U.S. vehicle sales are forecast at 1.4 million, a +4% increase from December 2012, because of a slight year-over-year increase in fleet volume. Retail sales in December are expected to reach 1,134,600, also a +4% increase from December 2012 adjusted for one less selling day.
The December seasonally adjusted annualized rate (SAAR) for retail sales is projected at 12.7 million, a decline from 13.4 million in November, but 660,000 stronger (+5.5%) than in December 2012. Average new-vehicle retail transaction prices in December are expected to reach $30,500, up $500 (+2%) from a year ago.
“Retail sales in 2013 are expected to reach 12.8 million, with consumer spending reaching a record $375 billion, a $40 billion increase from 2012,” says John Humphrey of J.D. Power, the source of the forecast.
If correct, total light-vehicle sales in 2013 are set to finish at 15.6 million units, while the Automotive forecast for retail light-vehicle sales remain at 12.8 million units. LMC Automotive has increased its total and retail light-vehicle sales forecasts for 2014 each by 100,000 to 16.2 million and 13.3 million units, respectively.
Vehicle manufacturing in North America year-to-date through November has increased +5% from the same period in 2012, with nearly 700,000 units of additional volume. Even as inventory has increased, production volume in November remained strong (or foolish) at 1.4 million units, a +4% increase from November 2012.
The Detroit Three continued to build inventory rapidly, and their combined days’ supply climbed from 87 days at the beginning of November to 93 days by the end of the month. This is potentially worrisome. It is normal for manufacturers to build up inventory to meet year-end demand, but the level is ahead of current sales rates. Moreover, late year inventory bloat has the potential to affect production in the first quarter of 2014. In contrast, European and Asian manufacturers all maintained or reduced their inventory levels in November.
Given the unexpected Detroit Three production push in November, LMC Automotive has increased its volume outlook for 2013 North American production to 16.2 million units. First quarter 2014 production is expected to grow 4.2 million units, a +4% increase, compared with the same period in 2013. Full-year production in 2014 is forecast at 16.6 million units, which is a +3% increase from 2013.
