SAN FRANCISCO (Jan. 28, 2015) — Low gasoline prices and pent-up consumer demand will combine to drive new car and light truck sales to an estimated 16.9 million vehicles in 2015, according to a forecast from the National Automobile Dealers Association (NADA).
NADA said its original sales forecast for 2014 of 16.4 million new cars and light trucks was on target.
The split among the segments in 2015 is expected to be 44 percent cars and 56 percent light trucks and SUVs because of lower gas prices, increased job growth and an improving housing market, NADA said.
“Consumers are more able to spend for extras because of declining gasoline prices and continued low interest rates,” said NADA Chief Economist Steven Szakaly at a Jan. 23 press briefing during the NADA Convention & Expo in San Francisco.
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“We expect to see significant growth in sales of light trucks, particularly in the large-size CUV and SUV segments,” he added. “At the end of the day, consumers like the utility and comfort that larger vehicles provide. Lower gasoline prices accelerate that shift.”
The pickup truck segment, in particular, is expected to benefit from an improving housing market, climbing to a 15.2-percent share this year from 13.7 percent in 2014, NADA said.
On the downside, small and midsized cars are likely to face a tougher market in 2015. Mr. Szakaly said he expects incentives to rise on small and midsize vehicles while hybrid sales are expected to be slower as long as the price of oil remains relatively low.
Midsize cars are expected to decline in share of total light vehicle sales to 17 percent from 18.6 percent, while small cars are expected to lose 1 percent of share.
“The one area where prices and segment share are likely to remain stable is in the luxury segment,” Mr. Szakaly said. “A strong luxury brand, in any retail business, will hold extra goodwill that a consumer is willing to pay for.”
NADA’s economic outlook calls for gross domestic product to be up 3.1 percent in 2015, with the potential for growth to exceed that level.
“The U.S. economy is poised to accelerate in 2015,” Mr. Szakaly said. “The only negative remains stagnant wages. If we see some sustained rise in incomes, GDP could easily exceed our forecast.”
The association noted there is little threat of inflation, though key policy rates from the Federal Reserve are expected to rise 50 basis points by year-end.
“Interest rates have to raise, admittedly the chaos in some overseas markets and the strong deflationary pressures from a rising U.S. dollar and a slowing Chinese economy leave room for rates to rise slowly,” he said.
“The bottom line is that it will be a good year for consumers with great products that last longer, are more fuel efficient and are safer than ever before,” Mr. Szakaly said added. “It’s always been about consumer choice and the benefits of a competitive market, and that is definitely what we have.”
NADA represents more than 16,200 domestic and international new-car dealership franchises.
– Tire Business
