The Good and Bad News About February 2014 Auto Sales

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It was a stormy February in much of the United States, but the forecast for auto sales on the month suggests dealers recovered enough in the home strectch to post gains over the previous year’s stats. According to a report by J.D. Power & Associates and LMC Automotive, improved weather and the President’s Day holiday brought auto consumers back into the fold to make February 2014 the industry’s best ever in one respect.

The prospects for a strong February dimmed when storms began to batter the eastern United States early and often in the month, but the joint report by the auto industry stalwarts says sales rebounded enough in the second and third week that the final tally for retail sales could hit 972,400, some 5 percent above February 2013 figures.

More good news followed with respect to transaction prices. According to John Humphreys, a senior VP of global automotive practice at J.D. Power, the transaction prices for the month could top $29,000, which would amount to the highest number hit in February ever on the continent. LMC Automotive maintained the final sales total for light vehicles will reach 16.2 million units by the end of 2014, the release noted.

While there were bright spots for the industry in sustained consumer demand and transaction prices, a note of caution was sounded on the production front. January 2014 showed stabilization in the manfacturing of new automobiles compared to 2013 stats, but high output by automakers in the final quarter of 2013 could lead to excess vehicles later in the year.

According to the release, LMC Automotive lowered its North American production forecast by 100,000 vehicles. Though that figure would still represent an improvement over 2013 and the highest total in over a decade, the industry forecaster noted the current state of the auto sector forced it to trim its prior production estimate.

The report indicates auto consumers are still wowed by holiday weekend sales bonanzas. Media outlets were flooded with ads touting President’s Day special from the Detroit Three as well as foreign brands such as Mazda (MAZDF.PK) and Kia (KIMTF.PK), whose sponsorship of the NBA likely paid dividends over the Valentine weekend that coincided with the February 15 All Star Game in New Orleans.

Automakers must constantly weight the benefits of moving inventory with incentives or holding out for higher prices. In terms of the early sales reports, it appears U.S. consumers work on both sides of the equation. Though they may show up at dealer lots to take advantage of holiday promotions, they end up paying well above the base MSRP by the time they’ve configured their automobiles for delivery.

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