February Car Sales in U.S. Expected to Plateau

Forecasters predict U.S. car sales this month will be very close to last year’s volume, when deliveries totaled 1.69 million units. They also note that retail incentives are at record highs, and low-margin fleet sales are on the rise.

J.D. Power-LMC Automotive anticipates a 1% gain in volume this month. Edmunds.com and Kelly Blue Book expect declines of 1% and 3%, respectively.

Power-LMC notes that incentives now equal more than 10% of the retail transaction price of a new vehicle. That hasn’t happened in February since the Great Recession eight years ago. Power describes the record discounting as a “fundamental threat” to the industry’s long-term health.

For the full year, Power-LMC forecasts a microscopic sales increase to a record 17.6 million units from 17.5 million in 2016. Kelly Blue Book predicts volume will drop to 16.8 million vehicles.

Analysts have cautioned that a surge in used cars on the market is exerting downward pressure on new-car prices, a trend likely to erode carmaker earnings in 2017.