Cox Automotive Forecast: Steady Pace for U.S. Auto Sales Continues in February
Thursday February 27, 2020
- The annual vehicle sales pace in February is expected to finish near 16.6 million, slightly below the pace last month, but slightly above the 16.5 million pace from February 2019.
- Helped in part by an extra selling day, February sales volume is expected to rise nearly 6%, or 75,000 units, above the year-ago level.
- Total light vehicle sales for 2020 are forecasted to finish near 16.6 million – down from 2019’s 17.0 million final level.
ATLANTA, Feb. 26, 2020 – February – like January before it – is known to be a weak month for vehicle sales, and this year should be no different. According to a forecast released by Cox Automotive, new light-vehicle sales volume is expected to rise nearly 6% compared to last February and 16% compared to last month. With leap year providing an extra selling day – 25 this year versus 24 last year, the gain is less impressive. After incorporating seasonal adjustments, the sales pace is expected to rise just slightly, from 16.5 million in February 2019 to 16.6 million this year.
According to Charlie Chesbrough, senior economist with Cox Automotive: “We’ve settled at a slower pace over the last few months, and our expectation is the new pace will continue this month and through 2020. We are in the late stage of the sales cycle, and demand is weakening even though incentives are relatively high.”
There are upside and downside risks to the forecast this month as sales in February can be greatly influenced by many factors, including harsh winter weather. Extreme weather can impact vehicle sales in winter months as shopping on dealership lots becomes more difficult, and cold, gray climate conditions do not support buyer excitement. Thus far, this February has not seen massive snowstorms or cold across much of the country, and these mild conditions should support healthy vehicle sales. However, another risk to the vehicle market remains credit availability, particularly in subprime lending. Auto financing continues to remain strong, but a downturn in the economy will impact credit availability.
The record for February occurred in 2000, at the peak of the dot-com bubble when sales reached 1.5 million vehicles, and the seasonally adjusted annual rate (SAAR) was 18.9 million. Exceeding this record is not expected this February as there is little stimulus from either the economy or the market that would lift the sales pace to this level. However, a higher than forecasted SAAR is possible given the strength of the underlying economy. Unemployment is at 50-year lows and the stock markets are at near all-time record highs. While fear around coronavirus is growing, it is unlikely to impact the auto market in February.
The vehicle sales pace is expected to trend lower in 2020, even though economic and consumer conditions remain strong. As Cox Automotive has noted prior, affordability is a major concern in the vehicle market as MSRPs, and monthly payments continue to increase. Retail sales have been in decline in recent years, and this trend is likely to continue in 2020.
February 2020 Sales Forecast Highlights
- In February, new light-vehicle sales, including fleet, are forecast to rise to 1.33 million units, up about 75,000, or 5.9% compared to February 2019. When compared to last month, sales are expected to increase over 185,000 units, or 16%.
- The SAAR in February 2020 is estimated to be 16.6 million, slightly below January’s 16.8 million pace, but above last February’s 16.5 million level. This February has 25 selling days, one more than last year, and 2020 is also a leap year, so many contributing factors to the SAAR seasonal adjustments.
All percentages are based on raw volume, not daily selling rate.
Save the Date: Cox Automotive Quarterly Sales Conference Call
A quarterly sales conference call hosted by Chief Economist Jonathan Smoke will be held on Monday, March 30, at 11 a.m. EDT. To join the call, dial 1-800-447-0521 or 1-847-413-3238 and provide the conference identification number 49425471. Chesbrough will join Smoke to provide industry analysis and insights for the first quarter and a market outlook for the first half. Michelle Krebs, executive analyst for Autotrader, and Karl Brauer, executive publisher for Autotrader and Kelley Blue Book, and Zo Rahim, research manager for Cox Automotive, will be available during the Q&A session.
About Cox Automotive
Cox Automotive Inc. makes buying, selling, owning and using cars easier for everyone. The global company’s 34,000-plus team members and family of brands, including Autotrader®, Clutch Technologies, Dealer.com®, Dealertrack®, Kelley Blue Book®, Manheim®, NextGear Capital®, VinSolutions®, vAuto® and Xtime®, are passionate about helping millions of car shoppers, 40,000 auto dealer clients across five countries and many others throughout the automotive industry thrive for generations to come. Cox Automotive is a subsidiary of Cox Enterprises Inc., a privately-owned, Atlanta-based company with revenues exceeding $20 billion. www.coxautoinc.com
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