UBS: Expect March Vehicle Sales Slightly Under Consensus

Based on the Evidence Lab Macro estimate for March, UBS’ Colin Langan mentioned that the U.S. SAAR was expected at 17.3 million, marginally below the consensus forecast of 17.5 million.

Plateauing Sales

“Macroeconomic data and most leading indicators are supportive of plateauing, not peaking sales; another strong month of sales would further market confidence that sales will not dip into a recession,” Langan pointed out.

EV Penetration

The analyst also noted that EVs had been witnessing slow growth due to weak economics, driven to a large extent by the low fuel prices. Most dealers believe that fuel cell and EV penetration would reach only 102 percent by 2025, as compared to the estimate of 3 percent penetration in the U.S.

In fact, most dealers believe that both EV and fuel cell would account for only about 4 percent of the sales in 2025, with full and mild hybrid accounting for about 8 percent.

“While some dealers are doubtful that the 2025 CAFÉ standard is achievable, most dealers still expect no change to the 163 g/mile of CO2 standard after the mid-term evaluation,” according to the UBS report.

Pricing/Margin Outlook

Langan also noted that most dealers expected to see a slight increase in ATPs in 2016, although the outlook was more positive for trucks.

“However, some dealers expressed concern that dealer margins will compress this year due to pressure from OEMs and aggressive competition among dealers,” the analyst added.

Analyst Colin Langan maintained a Buy rating on Ford Motor Company F and General Motors Company GM.