“There was a bit of a surprise on the upside; the industry did a little better than expected,” said Jeff Schuster, executive vice president for automotive at GlobalData, parent of LMC Automotive. “Still, a 15 million SAAR isn’t lighting the world on fire.”

The supplier disruptions that so vexed the industry last year “are still there, but they’re down considerably from where they were,” Schuster said. He also noted that strong fleet demand is more than making up for any softening consumer demand at the retail level.

“As we saw in January, things are still gaining steam and we’re seeing availability increasing”as inventory levels recover, said Tyson Jominy, vice president of data and analytics at J.D. Power.

“Demand remains very strong. Transaction prices set a record for February — up another 5 percent to over $46,000,” Jominy said.

Dealers are still able to maintain their pricing power, he added, albeit in a modestly reduced form. He noted that in February about 31 percent of retail sales were above sticker price, indicating that strong consumer demand continues to outpace supply. However, that figure is about half of what it was over the summer, he said. “Automakers aren’t going to start incentivizing sales until that number gets a lot closer to zero, or at least in single digits. So things are going the right way, but they’re still not there.”

Indeed, J.D. Power put February’s average incentive per new vehicle at $1,335 in February, up from $1,275 a year earlier, while incentive spending as a percentage of average sticker was nearly flat year-over-year at 2.8 percent, down 0.1 percentage point. TrueCar estimates incentives fell by $135 from February 2022 to $1,522 last month but rose 9 percent from January’s $1,396 level.

Schuster said he expects incentives to rise slowly this year as manufacturers walk a fine line trying to balance their factory utilization rates while avoiding overloading dealers with inventory.

“I think we will start to see incentives creep back in, but it may take a few months,” Schuster said. “We’re going to see a little more balancing from automakers and the discipline holding to not overbuild. But that balancing means that the manufacturers are likely to start enticing consumers to come back in; I don’t think it’s tomorrow, but certainly within the next six months.”

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