February U.S. Inventory Highest Since 2005

U.S. light-vehicle inventory remained at a 9-year high in February even though year-to-date sales are 1.5% below year-ago.

The last time inventory was higher in February, sales were on track to end 2005 at 16.95 million. So far in 2014, they are tracking at a 15.3 million-unit seasonally adjusted annual rate.

LV inventory ended February at 3.73 million units, 20.5% above year-ago and highest for the month since 4.05 million in 2005. It’s also the highest for any month since May 2006.

Days’ supply took a typical dip from January to 75 days’ from 89. Still, except for the recession year of 2009, it was February’s highest since 2005 and well above year-ago’s 65 days.

WardsAuto estimates inventory is roughly 200,000 units above where it needs to be, even when taking into account that sales should rebound from January-February’s weather-related losses.

Some of the excess is due to the harsh weather that reduced sales in January and February by an estimated 3%. The lost volume likely will be made up beginning in March, but auto makers already are paring production schedules and raising incentives on some vehicles to get stocks under control.

Since the recession five years ago, February days’ supply has averaged 63. With production capacity restored and market growth slowing after surging in the years following 2009’s 30-year-low, automakers are in position to manage inventory rather than scramble to catch up with demand. In this environment, a 70 days’ supply is estimated by WardsAuto to be an optimum level for February.

Inventory of domestically made LVs totaled 3.04 million units, also a 9-year high for February and 16.1% above same-month 2013. Days’ supply sank to 78 from 93 in January, but was well above year-ago’s 67.

Import inventory, in part because of more local sourcing of LVs, increased only slightly from January to 689,000 units and was 11.7% above year-ago. The import volume was a 5-year high for the month. February days’ supply fell to 66 from the prior month’s 77, but was above like-2013’s 60.

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