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February sales pace expected to slow from January

by Byron Hurd

Analysts expecting sales to dip.

After January's sales gave the industry hope for a familiar baseline, industry analysts are warning that February sales will likely dip as much as four percent overall compared to 2017.

If that prediction is proven accurate, it would make this the weakest February since 2015, when the industry was still on its post-recession upswing, and result in a lower projected sales rate than January's.

Analysts at Cox Automotive blame several factors, including increased interest rates, Wall Street volatility, a plethora of late-model used vehicles available (many via Certified Pre-Owned programs) which prove to be attractive alternatives to brand-new vehicles, and even historical indicators that the Winter Olympics can play a role in slowing sales.

The abundance of off-lease vehicles also draws attention to the fact that the several boom years leading up to a sluggish 2017 were had (at least partially) at its expense. Aggressive incentives and lease subsidies which boosted new-car-sales volume then are now cannibalizing it to an extent.

"February has typically been in the bottom three months of the year for new vehicle sales, as much of the market waits for the spring selling season," Charlie Chesbrough, senior economist for Cox Automotive. "The number of selling days in the month is unchanged from last year, so the expected decline is not calendar driven."

The biggest slides are expected to come from FCA, Ford, GM and Toyota, with Honda projected to hold relatively steady (as it has done so well over the past year or so). Volkswagen is expected to rebound slightly.

Cox believes an overall strong economy and high consumer confidence will keep the floor relatively high, preventing any dramatic slow-downs in the nearer term.