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FORECAST

December Sales Momentum May Mean Record Sales

December 17, 2015 by admin 1 Comment

2015 is on pace to set a new, all-time sales record in the United States. Retail and fleet light-vehicle sales are coming in strong as the year moves to a close.

2016 Toyota Tacoma.
2016 Toyota Tacoma.

December is shaping up as yet another strong month for auto sales. Mild weather across much of the country has been helping as well as continued low interest rates on consumer loans despite a recent, but nominal increase in lending rates. If the sales pace continues unabated, 2015 will go down as the best year ever for US sales, breaking the previous record established in 2000.

Those are the findings of a forecast developed jointly by LMC Automotive and J.D. Power. LMC is a noted supplier of automotive trends and intelligence; J.D. Power is a global marketing services company serving multiple fields, including automotive.

Within Reach: 17.5 Million Units

New light-vehicle sales for the month are expected to be the best we have seen for any month since 2005. That should allow U.S. sales to top 17.5 million units, surpassing the previous 17.4 million units reached in 2000. Retail sales (consumer or non-fleet) are expected to total 14.3 million units, representing the fourth best year in history.

Two more factors are also weighing in this year: December has five selling weekends, the first time since 2012, and will also have 28 selling days, the most since 2009. The selling days include the first few days of the new year as 2015 calendar year sales will include sales made through Jan. 4, 2016.

“As 2015 comes to a close, the industry is expected to post its strongest sales month of the year,” said John Humphrey, senior vice president of the global automotive practice at J.D. Power. “With continued record transaction prices, consumers are on pace to spend more than $44 billion on new vehicles in December and $437 billion on new vehicles in 2015, both record levels.” The previous record of $407 billion in annual consumer expenditure was set in 2014.

Humphrey also addressed the recent 0.25 percent increase in the Federal Reserve’s interest rate stating that it “…should have minimal impact on new-vehicle sales.”

Strong Fleet Sales

Fleet sales have been strong this year and have been making a significant contribution to this year’s sales pace. Data reveals that fleet sales were much stronger than expected in November, accounting for 19.5 percent of all light-duty vehicle sales. This month, that contribution is expected to drop to 18.2 percent.

LMC remains bullish on 2016 U.S. auto sales. The company has forecast 17.8 million total light-duty vehicle units, including 14.6 million retail sales. That forecast aligns with what other experts have been saying.

Stated Jeff Schuster, senior vice president of forecasting at LMC Automotive, “We now have greater confidence that record sales in 2015 will lead to yet another volume record in 2016. The year-over-year growth rate is projected to be one-third of the growth experienced in 2015, but total and retail light-vehicle sales are at a 2% increase in 2016, keeping the expansion going.”

Extensive Research Can Save You Money

For consumers shopping for a new vehicle, extensive research, including visits to dealer websites can save them money. Most new vehicles sell for hundreds to thousands of dollars below the window sticker price with greater savings achieved through aggressive negotiation. Arranging your own financing and taking manufacturer and dealer discounts instead can lower your overall costs.

See Also —  Ford Announces $4.5 Billion Electrification Initiative

Filed Under: Automotive News Tagged With: 2015 SALES, AUTO TRENDS, FLEET SALES, FORECAST, GMC SIERRA, J.D. POWER, JAGUAR F-TYPE, LMC AUTOMOTIVE, RETAIL SALES, Toyota Tacoma, US SALES

AutoPacific Forecasts Positive Auto Trends

February 23, 2015 by admin Leave a Comment

US auto sales continue to grow and have started the year off strong. Across the board, analysts have been predicting sustainable growth for the year, but few have dared to look much further out in the future. Now, AutoPacific has released its forecast for sales through 2020, what may surprise some people.

AutoPacific Forecasts Three More Years of Growth for U.S. Light Vehicle Sales

Ever since the US auto industry plunged in 2009 to depths not observed in decades, experts in recent months have been noting that the current recovery — now in its sixth year — is an unusually lengthy one. Yet, few people are looking beyond 2015, with most simply content to state that sales will continue to rise this year.

AutoPacific Inc., an automotive marketing research and product-consulting firm, has bravely looked beyond this year in a bid to forecast annual sales for the intervening five years. AutoPacific expects sales to approximate 17 million units this year and continue to ascend for two more years, peaking at 17.24 million units in 2017.

Best Market in a Decade

For 2015, AutoPacific expects sales to escalate by 524,000 units over 2014, coming in just under 17 million units. If the company is precise in its assessment, then the market would reach a threshold last attained in 2006.

“U.S. sales recovery has been steady since hitting the bottom of the decline in 2009, though recent years have seen things taper off from 11% growth in 2010 to 6% in 2014, and a forecasted 3% growth this year,” says Ed Kim, Vice President of Industry Analysis at AutoPacific. Furthermore, AutoPacific’s forecast for the year sees a 55 percent truck to 45 percent car allocation as consumers continue to embrace crossover utility vehicles, especially compact models. That apportionment would represent the largest truck share of the market ever seen.

AutoPacific Forecast Through 2020

With 2017 forecast as the peak sales year for the decade, AutoPacific has not envisioned that a major market correction is in the offing. Instead, the company has forecast a slight contraction beginning in 2018 and continuing through 2020.

The logic given for that downswing is based on two factors:

1) a probable rise in interest rates in the next few years and,
2) young buyers, also known as Millennials, waiting longer to purchase their first new car.

An overarching reason might also be weighted and that would involve loan terms. Notably, we are currently seeing loans for 72 months to as long as 96 months offered by some financial institutions, including the Navy Federal Credit Union. Indeed, the interest rate on 8-year auto loans underwritten by the NFCU presently stands at just 4.49 percent, although they are offered only to people with superior credit.

The Effect of Rising Interest Rates on Loan Terms

Once interest rates begin to ascend, then monthly payments will also begin to rise. Likewise, lenders may pull back and offer shorter term loans only, effectively shutting some consumers out of the new car market.

Speaking of loans, AutoPacific says that the average loan length today is 66 months (5.5 years) compared to 48 months (4 years) just a few years ago. Declared Kim about today’s loans, “Vehicle buyers will be in a negative equity position on their loans a lot longer than in the past, and that will have a profound impact on replacement demand in the future.”

Forecast Accuracy, Consumer Data and Purchase Intentions

AutoPacific’s forecast accuracy over the past 10 years has been 95.5 percent, with 2008 and 2009 coming in below 90 percent as most analysts underestimated the breadth and depth of the last recession. The company relies on consumer supplied data and economic forecasts to aid it with its own forecasting. Moreover, the company indicated that intelligence also helps analysts “…better understand vehicle buyer purchase intentions, including brand consideration and future segment intention.”

See Also — Journalist Survey: Social Media Participation

Chart supplied by AutoPacific.

Filed Under: Automotive News Tagged With: AUTO SALES, AUTO TRENDS, AUTOPACIFIC, FORECAST, INTEREST RATES, MARKETING, MILLENNIALS, NAVY FEDERAL CREDIT UNION, RESEARCH

IHS Automotive: Sharp Increase in Electric Vehicles Forecast

February 6, 2014 by admin Leave a Comment

Battery prices fall, making EVs more affordable.

IHS Automotive: BMW i3

BMW i3 is one of several new EV models for 2014.


Electric vehicle adoption continues to grow and 2014 could provide its biggest boost yet, rising by a projected 67 percent for the year. Thats the forecast of IHS Automotive, the business information, insight, and analysis firm that acquired Polk in 2013.

IHS Automotive Forecast

Behind the surge in demand are tighter emissions standards in Europe and increased production including new models from BMW and Fiat. IHS estimates that the total global production of EVs for 2014 will come in at 403,000 units, a number that includes pure electric (electric only) and plug-in electric hybrid vehicles (PHEVs).

The projected increase builds on the 44 percent surge seen in 2013. It also far outpaces the estimated 3.6 percent rise in worldwide production for all vehicles expected for 2014.

And demand is expected to rise across the globe with North and South America generating 30 percent of the share to 40 percent for Europe, Africa and the Middle East. The remaining 30 percent share estimate was for Asia and the Pacific region.

IHS Automotive: Tesla Motors

Tesla is supporting its cars with a global charging network.

Euro 6 Legislation

In Europe, tighter emissions standards come into play in the second half of the year, under the European Commissions new Euro 6 legislation. Ben Scott, analyst for IHS Automotive, noted that manufacturers are lining up with new models to serve consumers beyond the aforementioned BMW i3 and Fiat 500e.

And the expanded product line up should generate a corresponding increase in interest for EVs. Besides Fiat and BMW, the Audi A3 PHEV, Volkswagen e-Up!, and the Mercedes-Benz B-Class Electric are also new to the market. These models will be supported by a broadened electric vehicle charging station network that will add 35,000 charging units to the worldwide pool for 2014.

AC and DC Chargers

New types of chargers are entering the market too and include those that satisfy AC-Type 2 Mode 3, DC-CHAdeMO and DC-CCS standards. They’re known as trio chargers as they meet the three different accepted standards and can be used by all EV models.

Besides AC chargers, the first DC chargers are also hitting the market, a more costlier but more efficient charging option that is expected to drop in price as demand for same increases, chiefly in China and in Europe.

Larger Electric Batteries

Another trend that IHS Automotive has been following are new electric vehicles with larger and more efficient electric batteries. Well see more models equipped with 40kWh batteries, what deliver a range of at least 150 miles. Thats approximately double the range most standard EVs offer today, a move that will remove range anxiety from buyer consideration for more EV shoppers.

Also at play are lower prices driven in part by increased production and a price war that has pitted Panasonic against LG Chem. Panasonic is the battery supplier for Tesla and LG Chem for the Chevrolet Volt. Samsung has also gotten into the market and is the supplier of batteries for BMW and Fiat.

IHS Automotivve

LG Chem provides the electric battery for the Cadillac ELR.

New Technologies Mean Lower Operating Costs

And it isn’t just the battery makers that are delivering efficiencies. Both OEMs and other industry suppliers are finding ways to deliver improved or new products at lower costs, helping to drive down the price of EVs.

For instance, Bosch has developed a new start/stop system that shuts off power to the car and reduces fuel consumption by up to 10 percent. The Ford Motor Company has developed a solar panel that affixes to the roof of the Ford C-MAX Solar Energi Concept, what can provide up to four hours of battery charge daily on sunny days.

IHS Automotive Trends

Other electric auto trends that IHS Automotive has forecast includes consolidation of charging station companies, government-mandated EV sales in China, and a continued downward trend in EV prices although government incentives are critical to help consumers in this effort.

Certainly, 2014 will again be a pivotal year for EV sales, what will constitute about 0.5 percent of the global new vehicle market. Thats a drop in the bucket, but a positive auto trend that supporters will embrace.

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Filed Under: Automotive News Tagged With: BMW I3, electric charging stations, ELECTRIC VEHICLES, Fiat 500e, FORECAST, IHS AUTOMOTIVE, PHEVS

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