Analysts question if new-car sales pace can hold up

Estimates on new-vehicle sales in March varied but all pointed toward year-over-year growth as inventory rebuilds and consumer confidence holds steady. Analytics firms forecast the new-vehicle seasonally adjusted annualized rate (SAAR) to land between 15.4 million and 16.4 million units in March: Cox Automotive expects the SAAR to land at 15.5 million units, a 4% YoY increase; Edmunds estimates the SAAR at 15.6 million units, up 9.1% YoY; JD Power pegs the SAAR at 16.4 million units, up 10.8% YoY; and S&P Global Mobility forecasts a 15.8 million-unit SAAR, a 6% YoY increase. At 15.8 million units, March would mark one of the highest monthly volumes in two years, Chris Hopson , principal analyst at S&P Global Mobility, told Auto Finance News . “We’re returning to a bit of normalcy from a monthly volume level,” he said. “March should go up. We have first-quarter sales events, we have clearance-type activities [and] tax returns. That’s good to see. “But that doesn’t mean there’s momentum. Next month might change from this direction,” Hopson said. “Momentum is hard to come by.” Walking a fine line Improved sales numbers come as inventory rebuilds on dealership lots, incentives increase and consumer sentiment holds steady despite high interest rates and elevated car prices. But automakers will have to walk a fine line to keep the current trajectory. “OEMs are having to be flexible on what they’re producing … to get the right product to the right customer,” Frank McCleary , partner at Porsche Consulting , told AFN. “The tricky part is going to be if we’re able to hit a soft landing and not create any disruptions to consumer sentiment and demand,” he said. “Consumer demand has stayed relatively strong, but at what point does that break?” The Consumer Confidence Index landed at 104.4 in March, unchanged from a downwardly revised figure in February, according to the Conference Board , a nonpartisan think tank. Automakers will also have to balance incentives with consumer demand to continue to move metal at the current pace, Joseph Yoon , consumer insights analyst at Edmunds, told AFN . OEMs “can’t sit on inventory forever. They’ve got to get rid of that,” Yoon said. “If customers aren’t buying at whatever promotions they have set up right now, that means they’ve got to make the deal better for customers. “It’s going to be an interesting rest of the year as automakers try to figure out what the best way is going forward,” he said. Registration is now available for the annual Auto Finance Summit East 2024 , May 1-3 in Nashville, Tenn., which gathers lenders, dealers and fintech innovators in an event designed to bring the power of technology to a cross section of industry players. Visit AutoFinance.Live to learn more.

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