WESTLAKE VILLAGE, Calif. — A lift in shopper traffic early in the month as well as the incentives rolled out by automakers are likely to bode well for the new-vehicle retail sales pace for April, which should show a modest uptick, according to J.D. Power and Associates, 

The company said the seasonally adjusted annualized rate for new-vehicle retail sales will likely continue to gain ground from its March upswing and climb 1.8 million units from its year-ago level. 

Specifically, J.D. Power is forecasting that the new-vehicle retail market will have a SAAR of 9.8 million units, up from 8 million in April 2009. 

Analysts are projecting that 804,200 new-vehicle retail units will be sold, a 22-percent year-over-year upswing.

"While new-vehicle retail sales in April are benefiting from the continuation of March's incentive programs, average incentives per vehicle are substantially lower, at $2,800, compared with $3,400 one year ago," Jeff Schuster, executive director of global forecasting at J.D. Power, pointed out.

"Compared with March, incentives are down by approximately $200, which suggests that the likelihood of an outright incentive war is now lower," he added. "This decline in incentives, due to a lower percentage of previous-year models in inventory this year, and the upturn in volume from last April have created a healthier environment — which is consistent with the improved first-quarter financials being reported."

Meanwhile, J.D. Power is expecting fleet sales of 205,000 vehicles this month, a gain of 28 percent versus year-ago figures.

So, with fleet included, there will likely be total of just over 1 million new vehicles sold during April, compared with 819,126 vehicles a year ago.

Total SAAR (including fleet) during April is projected at 11.5 million units, versus 9.2 million in April 2009.

This marks a modest decrease from the SAAR of 11.7 million in March, but J.D. Power explains it is consistent with fleet mix returning to a more normal level of 20 percent after being higher in previous months of 2010. 

Production Level Forecast

Moving on, J.D. Power also discussed production levels, pointing out that there were 1.084 million units built in March, a 60-percent increase over March 2009.

First-quarter production climbed 71 percent to almost 2.9 million units.

J.D. Power expects second-quarter production to reach 2.8 million vehicles, which would be a gain of 56 percent.

This month began with 53 days' supply inventory level, compared to the "industry norm" of 60 days. 

"The concern that the increase in production in the first quarter would outpace the selling rate-and create an inventory glut-has subsided," Schuster pointed out.

So, J.D. Power's 2010 forecast North American production has been brought up to 11 million units — a 3-percent increase from earlier projections — thanks to inventory levels being so small and the SAAR being so healthy.

Should production hit 11 million units, it would be close to a 30-percent gain from 2009 levels (which reached 8.5 million vehicles).

J.D. Power anticipates that because of greater production numbers, North American capacity utilization will hit 63 percent, compared with 47 percent last year. 

How Will 2010 Play Out?

Moving on to discuss the sales outlook for the remainder of 2010, J.D. Power said there continues to be "mixed signals." The sales rate has improved since early 2010, but the rebound in the economy is "uncharacteristically slow."

Not to mention, inventory levels are still being replenished in the manufacturing field, including the auto market, according to J.D. Power.

Due to these "offsetting factors," J.D. Power is still projecting total vehicle sales of 11.7 million units for 2010, and forecasts retail sales of 9.6 million units.

"Consumer confidence has recently picked up, but it remains low, due in part to an unemployment level still at 9.7 percent," Schuster noted.

"However, the outlook is improved from where it was at the end of 2009, and the industry is now able to focus on moving forward, rather than worrying about surviving," he concluded.