"While February sales have improved from a year ago, the pace of the recovery has hit a speed bump, with this month's SAAR down from January's selling rate," said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. "This hiccup appears to be the result of consumers waiting out the Toyota recalls and winter storms impacting showroom traffic, but the effects of these external factors are likely temporary and the recovery is expected to get back on track."
Given stronger-than-expected economic growth in the fourth quarter of 2009 and improved financing and leasing conditions, J.D. Power and Associates is increasing its 2010 forecast to 11.7 million units (from 11.5 million units) for total sales and to 9.6 million units (from 9.5 million units) for retail sales, despite February's expected performance.
At the beginning of February, vehicle inventory was at a 71-day supply, compared with 121 days in February 2009. For the first quarter of 2010, production remains on track to increase by more than 1 million units from the same period one year ago. Production volume for 2010 overall is expected to increase by 24 percent to 10.6 million from 8.5 million in 2009.
"Although inventory levels have improved from a year ago, they have increased from levels during the past four months - creating a risk of inflated inventory levels in the short term, given the slower sales pace in February," said Schuster. "In addition, the recovery in production levels is more pronounced than the recovery in demand after the extensive production cuts in 2009, adding concern of further inventory troubles throughout the year."
