Growth in fleet is projected to offset weaker growth in retail sales, forecasts show. J.D. Power and LMC Automotive anticipate total March sales of 1,330,700 new vehicles, for a 6.2 percent increase compared with March 2022, but just a 1.9 percent increase in new-vehicle retail sales for the same period.
For the first quarter, J.D. Power and LMC Automotive forecast total sales of 3,526,700 new vehicles, which they said was a 7.3 percent overall increase from a year ago, while new-vehicle retail sales rose only 0.2 percent.
“Retail sales are almost flat from a year ago,” said Tyson Jominy, vice president of data and analytics at J.D. Power. “The growth is all coming out of the fleet channel.”
Sales seasonality tends to be better for fleet than retail in the first quarter, Jominy said. But demand remains strong among fleet buyers, who have sourced vehicles any way they can after initially reducing their inventories during the pandemic. Many automakers, which prioritized more profitable retail sales during the pandemic and chip shortage, still face a backlog of commercial and rental fleet orders.
Cox Automotive said it estimates 2.2 million fleet sales in 2023, a 23 percent bump compared with 1.8 million last year. Jonathan Smoke, Cox Automotive’s chief economist, told reporters Monday that fleets have been “starved” of inventory and have looked to auctions and dealership lots as an alternative to automakers. Smoke believes fleet buyers are inclined to take every vehicle the industry is capable of delivering this year.
“If it weren’t for the strong gains in fleet, the new-vehicle market would look a bit more disappointing so far this year, and we would see evidence of supply starting to build there. But the overall market is still supply-constrained, so that’s the saving grace,” he said.
“I’m not feeling too good, frankly, about the rest of the spring and the summer,” Smoke added, “because … a lot of these things that appeared to be tailwinds at the very beginning of the year have rapidly turned into headwinds.”