U.S. light-vehicle sales are forecast to take a dive in January, while inventories are expected to remain high despite widespread production cutbacks.

Additionally, first-quarter deliveries likely will fall below year-ago results, assuming manufacturers show restraint regarding sales incentives.

Ward’s is forecasting January light-vehicle sales to post a 15.7 million seasonally adjusted annual rate (SAAR), following December’s surge to 18.3 million. That also is down from year-ago’s 16.3 million SAAR, and the lowest since June 2004’s 15.4 million.(See related data: Sales Forecast Jan. 31 U.S. Light Vehicle Sales)

Actual volume is forecast at 1.03 million units, equaling a daily selling rate of 43,000 over the month’s 24 selling days. The DSR is less than 1% below year-ago’s 43,176 – 26 selling days – on volume of 1.12 million.

Even though inventories for some companies, and the industry as a whole, remain high, manufacturers are expected to hold back from pulling the trigger on new incentives and rely more on slower production to control inventory for the month.

December’s SAAR was a 38-month high and will have a large pull-ahead effect on January. Thus, the drop is not as serious as it looks, and the combined December-January SAAR of 17.2 million is higher than year-ago’s 16.9 million.

But January’s results will put a damper on the quarter, as well as make it tougher for the entire year to match 2004.

Sales should rebound in February and March, and Ward’s is forecasting a 16.3 million SAAR for first-quarter 2005, compared with 16.5 million in like-2004.

The outlook assumes that the industry, especially General Motors Corp., will not open the floodgates on incentives to cull first-quarter inventories. The second quarter is the highest-volume sales period of the year, and manufacturers with excess inventory are likely to combine slower production in April-June with the seasonally higher demand to continue paring dealer stocks.

However, if GM turns on the incentive spigot and others follow suit, then first-quarter sales easily could match year-ago levels.

Longer term, Ward’s is forecasting calendar 2005 U.S. light-vehicle sales at 16.7 million, down from 2004’s 16.9 million. The outlook takes into account the apparent easing of incentives, higher interest rates and other factors.

U.S. light-vehicle inventory ended December at 3.77 million units, 1.0% above year-ago. That’s the narrowest gap for any month since the last time inventory was below year-ago levels in September 2002.

Still, stocks remain about 500,000 units higher than needed and will remain about 400,000 units too high when the first quarter ends, based on a Ward’s outlook.

Inventory is forecast to end January at 3.984 million units, 2.6% above year-ago, but should fall below year-ago levels for the first time in two-and-a-half years by March 31.

January days’ supply is forecast at 93, compared with 66 the prior month and 90 a year ago.