WESTLAKE VILLAGE, Calif. -

Even though fuel costs have skyrocketed and inventory levels are dipping, the industry’s new-vehicle retail sales don’t seem to have gone off course, according to J.D. Power and Associates. Interestingly enough, the firm found that inventory “uncertainty” may actually be pushing consumer demand.

J.D. Power further noted that March’s first three weeks of retail sales were robust and on pace for another year-over-year increase for the month. Specifically, the company projects that there will be 991,900 new-vehicle retail sales for the month, representing a 12-percent gain from March 2010 when adjusted for selling days.

This would result in a seasonally adjusted annualized rate for retail sales of 10.7 million units for the first quarter and a retail SAAR of 10.9 million vehicles for March. The forecast for 2011 is 10.6 million vehicles.

“Retail sales in March are exhibiting strength and remain in line with expectations, despite increasing gas prices and falling inventory levels,” stated Jeff Schuster, J.D. Power’s executive director of global forecasting.

“In fact, retail sales in March may be benefiting from the uncertainty around inventory levels, as consumers flock to dealerships to secure their choice of vehicle as availability decreases,” he added.

J.D. Power also spotted changes in the retail segment mix. Subcompact cars likely will show more than a 0.5-percent gain in market share and come in at 3.8 percent, compared to a 3.2 percent share the month before. Compact cars are likely to see their share climb, as well. J.D. Power projects them at a 20.4-percent share for March, compared with 17 percent the previous month.

Overall, J.D. Power is projecting the total light-vehicle sales total to hit 1,205,200 units, marking a 9-percent year-over-year surge. The more than 1.2 million overall light-vehicle sales expected for March would translate to a total SAAR of 12.7 million units, compared with 13.4 million in February and 11.7 million in March 2010.

The firm expects that fleet sales will take a hit in light of the anticipation for Japanese brands to substitute fleet volume for retail volume in response to inventory shortage concerns.

Specifically, J.D. Power expects fleet sales will reach 213,000 units, which would be an 18-percent share of light-vehicle sales.

Projection for Full-Year 2011

Moving on, J.D. Power offered its expectations for the rest of 2011. With a more-robust-than-anticipated start to 2011, the firm said prospects for the year continue to be “optimistic.”

With retail sales being so hefty, J.D. Power has upwardly revised its full-year retail forecast. It had been 10.5 million units, but the firm bumped it up to 10.6 million vehicles. This sales figure would be up 16 percent year-over-year.

J.D. Power is maintaining its 13 million unit total sales forecast. If it holds true, it would be a 13-percent year-over-year hike.

“The economy is no longer the primary variable that could impact the total year sales volume, as the industry is now grappling with gas prices at their highest level in more than two years, as well as the potential for widespread shortages in vehicle availability,” John Humphrey, J.D Power’s senior vice president of automotive operations, pointed out.

“While risks remain evident, the industry’s condition is much stronger and able to weather external shocks better than it could before the recession,” he continued.

Production Figures

Next up, the firm offered a bit of analysis on North American production.

February production figures for North American climbed 15 percent year-over-year and came in at 1.06 million units, but the firm stressed that parts shortages stemming from the Japanese disaster are starting to affect near-term production levels.

J.D. Power pointed out that overtime and Saturday production have been cut by a few OEMs and GM even temporarily production at its Shreveport, La., plant.

There hasn’t been any major lost volume yet, so J.D. Power projects that first-quarter production will climb 14 percent year-over-year and reach 3.3 million units.

“With the uncertainty remaining high about the full extent of the parts supply situation, North American production could be impacted in the weeks to come,” Schuster noted.

“However, our 2011 production forecast remains at 12.9 million units, as we expect any lost volume would be made up later in the year,” he added.

Vehicle supply was at 60 days’ supply at the end of February, compared with 71 days’ when January ended. This decrease was attributable to robust sales during the month.

Inventory levels climbed 13 percent to 2.5 million units.

“With the strength of March sales combined with supply constraints from Japanese imports, inventory is expected to continue to fall during the next few months,” J.D. Power concluded.