April auto sales come out tomorrow, and they’ll show some growth from last year. But expect to see a slight slowdown from energetic March sales.
Total light vehicle sales in the U.S. are expected to reach 1.4 million in April, for an estimated Seasonally Adjusted Annual Rate (SAAR) of 6.2 million, according to forecasts from Edmunds.com. These projected sales would be an 8.7 percent decrease from March, but a 9.1 percent increase from April 2013.
After a bout of freezing weather scuppered sales in the first two months of 2014, car purchases surged in March– and some of that demand continued in April.
“A lot of March momentum carried into April,” said Jessica Caldwell, a senior analyst at Edmunds.com. “Now we’re selling at healthier rate.”
If sales align with projections, new light-vehicle retail sales for the month of April would reach their highest point since 2005.
Nissan, Toyota and Chrysler will lead the pack in sales increases from last year. Forecasts say the three companies will post double-digit gains from April 2013: Nissan at 18 percent, Toyota at 14 percent and Chrysler at 12 percent.
Across the boards, automakers are still luring buyers with more incentives. Six of the “Big 8” global automakers grew incentive spending in April, according to data collected by Truecar.com. Japanese automakers applied incentives more aggressively than their American competitors, with Hyundai/Kia stepping up incentive spending by 51 percent since April 2013, Honda by 32 percent and Nissan by 28 percent. With the yen falling slightly against the dollar, Japanese automakers have more room to offer deals to American consumers without losing profits.
“The Japanese companies are adding incentives because they can. They have flexibility because of the yen,” said Alan Baum, an auto analyst at Baum & Associates. “It doesn’t hurt their bottom line.”
Moving into the spring selling season, both foreign and domestic automakers have a backlog of inventory that incentives can help to reduce. In March the average incentive ratio, which measures how much of a vehicle’s cost was returned to the consumer through incentives, was 7.3 percent. The ratio is expected to remain steady in the April and through the spring. Analysts say that average incentive ratios between 7 and 8 percent are healthy.
“We’re going to see incentive wars this month,” said Kevin Tynan, a senior auto analyst at Bloomberg. “As a buyer it’s a good month to be out there.”
The April forecast is expected to keep pace with full-year 2014 forecasts of 16.1 million new vehicle sales per month, an increase from 15.6 million vehicles in 2013.