US auto sales slump extends into February: analysts

US new vehicle sales in February are projected to fall on the year again as dealership inventories remain tight amid automaker production constraints, according to industry analysts.

Total sales for February are estimated to be 1.06 million vehicles at a seasonally adjusted annual rate of 14.1 million, falling from sales of 1.19 million at a SAAR of 15.9 million in February 2021, according to a joint statement released Feb. 25 by analytics firms JD Power and LMC Automotive.

"With retail inventory on pace to finish a fourth consecutive month below 900,000 units and ninth consecutive month below one million units, the new-vehicle supply situation is not displaying signs of near-term improvement," said Thomas King, JD Power's president of data and analytics. "Sales in February are being determined by the number of vehicles delivered to dealerships rather than reflecting actual consumer demand."

King said nearly 53% of vehicles are currently being sold within ten days of arriving at a dealership, and more buyers have started to place custom vehicle orders ahead of time.

Major automakers in North America and around the globe announced production cuts throughout 2021 because of multiple supply chain material shortages, most notably involving semiconductor chips. While the same conditions persist early in 2022, automakers and analysts have said that supply chains and vehicle production could stabilize by the end of the year.

However, King said no improvements are expected in March.

"The underlying question is which manufacturers will have the ability to produce enough vehicles to increase inventory levels," he said. "Ongoing supply chain disruptions, along with near-term announcements of production outages by several manufacturers, mean that the aggregate inventory situation is unlikely to change in March."

Cox Automotive provided similar estimates, forecasting new vehicle sales totaling 1.08 million units at a SAAR of 14.4 million in February, falling year over year by 11% and 72%, respectively.

"With low supply and low sales volume, and no tangible market change expected, a big decrease in the sales pace is likely in the offing for next month," Cox senior economist Charlie Chesbrough said in a separate statement Feb. 23. "Come spring, when sales are expected to be much higher, the SAAR will look particularly weak."

Though unit sales in February were slightly higher than in January, both analytics firms said SAAR numbers fell on the month.