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U.S. Auto Sales Bounce Back after Hurricane Sandy, Hit Highest Level of 2012

11/21/2012
At the end of last month, Hurricane Sandy negatively impacted new-vehicle sales as the storm ravaged major U.S. population centers. During November, consumers are responding by purchasing more new cars, trucks and SUVs than in previous months of the year.

In a monthly sales forecast jointly developed by J.D. Power and Associates and LMC Automotive, data indicates that new-vehicle retail sales are expected to reach 931,900 units for November, reflecting the highest retail selling rate since January 2008.

"Sales have strengthened each week in November, which bodes well for a strong finish to the month and the year," said John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates. "We expect healthy sales in December, as the industry continues to recover from Sandy and leads into its year-end sales events."

Although November sales indicate continued strength through the end of 2012, LMC Automotive is maintaining its current annual light-vehicle sales forecasts for both 2012 and 2013. The company states: "The overall outlook is more favorable... as the current level of uncertainty is expected to be reduced in the first half of the year."

Currently, LMC Automotive is forecasting 14.4 million units for total sales and 11.7 million units for retail sales in 2012. In 2013, the company expects total light-vehicle sales to reach 15 million units, with retail sales accounting for 12.2 million of those vehicles.

"The irrepressible need and willingness of consumers to replace aging vehicles is stronger than the effects of natural disasters and fiscal turmoil both here and abroad," said Jeff Schuster, senior vice president of forecasting at LMC Automotive. "A sustained recovery pace in auto sales is expected over the next six months, barring any fiscal cliff hangover, but the medium-term forecast is still dependent on more pronounced economic activity and growth."

Hurricane Sandy did more than depress vehicle sales at the end of October; the storm effectively increased vehicle inventory at dealerships at the same time that dealers were stocking additional inventory in advance of year-end sales promotions. In October, dealers held, on average, a 59-day supply of new vehicles. In early November, the number rose to a 71-day supply.

J.D. Power and LMC Automotive believe that current demand, coupled with additional sales as consumers in the storm zone replace destroyed vehicles, will resolve the surplus inventory situation through December.

"The continued pace of demand in North America, with sales up 13 percent through October, is supporting the short-term production plan and volume at the highest level since 2005," Schuster said. "Production levels continue to be managed to demand, so a growing level of inventory is not setting off any alarms, as some inventory building is normal as a year closes."

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