January is a tricky month for forecasting.
First off, most years there are year-end sales events in December. These events wrap up New Years Day weekend. This year, this was January 3rd. Not surprisingly, sales over this weekend get reported in December to take advantage of the special offers.
The result is that this January effectively consists of 28 days instead of 31—at least from a sales perspective.
Because of the year-end sales events, the first couple weeks in January tend to be slow—after all, if you wanted a new vehicle, why wouldn’t you buy in December when it was on sale?
Much of this is baked into the SAAR algorithm, which assumes that January will be the slowest month of the year in terms of unit sales.
So the data that is starting to come in is at least a little surprising. Shopping activity on the web site is “strong.” (I put this in quotes, because this is a relative thing. Strong as compared to activity over the past couple years.)
Add to this the sales data we are seeing—which also looks robust—at least for January. And remember, this is before the 15th, when sales typically start to pick up.
So here are our best guesses for January:
December momentum is continuing. The data points to retail sales of 706k, or a SAAR of 10.62m. (Compared to 949k or 10.36m SAAR in December). If we assume the same fleet mix (17%) as December, we would see total sales of 851k, or 12.8m SAAR. (Up from 12.5m)
Retail-share-wise, compared to the same period last month, BMW is down about 10%, while Hyundai and Kia are up about 8%. Everyone else is relatively stable.
Note how the overall sales are much lower, but the SAAR is actually higher than December. As I said, SAAR assumes a slow January.
What will be really interesting is the next 15 days. Will we see a typical sales uptick? Will this be enough to push SAAR over 13m overall?
Don’t know. What is clear is that consumers are out shopping and buying. Not a bad way to start the year.