U.S. sales are expected to remain healthy in January after spiking to an 18.3 million seasonally adjusted annual rate (SAAR) in December.

Ward's is forecasting January’s SAAR to drop to a still-solid 16.4 million rate, with sales volume finishing nearly even with year-ago results (see related data: Ward's Forecast - Jan. U.S. Lt. Vehicle Sales).

Incentives at the Big Three largely are the same as December’s. They are not expected to be scaled back to the degree they were in September, after 18 million-plus SAARs in July and August were followed by a sub-16 million rate over the next three months.

Plus, inventory is more plentiful than at the end of August and will be able to support January’s forecast volume. Notably, inventory of import vehicles, alone – at 634,499 units – was 23.8% above year-ago and equal to 18.4% of the total, the highest since 18.8% in August 1991.

This could put added pressure on domestic producers to add more consumer and dealer incentives in order to keep volume up and maintain market share.

December’s sales surge caused light-vehicle inventory to decline 5.1% from the prior month, which is more than usual, but the draw-down only served to put the industry more in sync with trend-line demand, pegged at 16.5 million.

Volume is forecast at 1.1 million units, for a daily selling rate of 44,164, slightly below year-ago’s 44,348 – 25 selling days both periods.

Jan. 31 light-vehicle inventory is forecast at 3.7 million units, a 7.4% increase from the prior month and 18.9% above like-2002, when the industry still was rebuilding stocks after the best quarterly sales in history during October-December 2001 (see related data: Ward's Forecast - Jan. 31 U.S. Dealer Inventories).

Days’ supply is forecast at 84, compared with 60 on Dec. 31 and 70 a year ago.

Inventory of domestically made light vehicles is forecast at 3.07 million units, 8.8% ahead of the prior month and 16.7% above year ago. Days’ supply is projected at 88, vs. 61 last month and 76 in January 2002.

January’s inventory forecast appears high for the period, but assuming the industry can maintain sales of 16.5 million SAAR for the first quarter, inventory for domestically produced vehicles will end the period in line with demand.

There likely will be some inventory buildup in the first and second quarters, as several plants – mainly General Motors Corp. and Ford Motor Co. facilities – will be closing or slowing their line speeds to tool for new vehicles (see related data: Dec. 2002 U.S. Light Vehicle Inventory).


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