JD Power Report Points To Record-Setting February

A forecast by JD Power and LMC Automotive has predicted the best February for auto sales in 13 years. The research takes into account new vehicle retail and total sales. New vehicle retail sales are expected to reach 1,033,100 units. That number would be a 9 percent jump from the same period in 2014, however it would be the first time that new retail auto sales topped 1 million units since 2002.

John Humprey, Senior Vice President of Global Automotive Practice at J.D. Power, stated a strong January will give way to a strong February. Humprey said, “The industry had a great start to 2015 in January, and that sales momentum continues in February with exceptional growth in retail sales.” Jeff Schuster, Senior Vice President of Forecasting at LMC Automotive, said in a statement,” Strength at the start of 2015 is a key factor in keeping the industry on target to surpass annual vehicle sales of 17 million units for the first time since 2001.” The report also shows that the compact SUV segment is leading the industry in retail sales for the 5th month in a row. That segment has made up 15.2 percent of retail auto sales thus far during February 2015.

According to a press release from J.D. Power, Humprey said lease penetration through the first 11 selling days in February is 27.4 percent of retail auto sales, which is the highest of all-time. Leasing appears to be becoming more popular, if for nothing else, because it can be less expensive for consumers than taking out a loan. A report by Experian Automotive pointed to the average monthly cost of leasing three popular new vehicles verses getting a loan to purchase them. For all three, there was a significant average savings for those consumers who opted for a lease instead of a loan. For a Honda Accord, the average monthly loan payment was $416, compared to $312 for a lease. The same study found that a Toyota Camry cost consumers an average of $407 per month for a car loan and $301 for a lease. Experian Auto also found that a Ford Fusion cost buyers $418 per month with a car loan, while a lease would only cost them $318 per month. As of the third quarter of 2014, the average overall cost of a new vehicle lease was $407 per month compared with $470 for a new vehicle loan.

With the JD Power report showing a record percent of retail auto leasing transactions, certified pre-owned vehicles are growing in popularity. Joe Orr, the General Manager at Dick Hannah Honda in Vancouver, WA told DrivingSalesNews…”with the rising cost of purchasing used vehicles, customers are finding CPO a way to validate the expense and cover their investments. I would expect to see CPO grow, as prices stay strong in the used car market. It also doesn’t hurt that manufacturer pressure and massive marketing dollars always moves the needle.” With new retail sales, leases and CPOs looking strong, how can dealers advantage and move that needle? How has your marketing strategy changed during this industry upswing? Finally, Have you seen an increase in leases and CPO sales?