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AutoPacific‘s latest forecast for car and light truck sales in the United States has sales continuing to increase through the end of the decade after dropping significantly in 2006. In fact, sales are forecast to exceed 18,000,000 cars and light trucks by 2010 or 2011. This is about 4% higher than the previous peak reached in 2000. VehicleVoice asks why?
The American Population is Growing
In Fall 2006, the USA population will reach 300,000,000. By 2010, the population is conservatively estimated by the US Census Department to be about 310,000,000 people. By 2020, the population is expected to be over 335,000,000 people.
As Baby Boomers age, the next huge cohort of the car-buying population (Generation Y) is filling in behind them. Boomers, the largest population cohort in the USA ever, now has the most discretionary income of any prior population group. They will be buying more cars as they age… Different from prior generations. In fact, a typical American will own 13 vehicles during their lifetime with 7 purchased after the age of 50.
Immigration is also playing a factor in population growth (many people are upset about “illegal immigration”). New immigrants, many of them in the USA illegally, do not usually buy new vehicles but buy used vehicles. This takes the pressure off the used car market and somewhat stimulates new car demand.
Atomization Effect
AutoPacific has completed a detailed analysis of new vehicle nameplate count since 1947 through 2011. We call this atomization. This is the count of new cars and light trucks available for sale in the USA for any given calendar year. In 1947, there were less than 40 nameplates on sale in the USA and by 2011 there will be 324 at a minimum.
This is a combination of customer pull and manufacturer push. Manufacturers are trying to more closely satisfy the specific wants of their buyer groups and with new, more efficient, product development techniques can afford to develop additional nameplates with a reasonable amount of differentiation.
Atomization does have a negative impact on sales per nameplate. A crude analysis of sales per name plate shows that the average vehicle line will need to be profitable with sales of 60,000 units or less.
The Economy is Strong
Unless something unexpected (like another 9/11) happens, continued growth is expected. There have been and will be peaks and valleys, 2007 might be below trend, perhaps 18 million in 2010 will be a little above trend. But directionally, the forecast seems appropriate.
4) Oil Price Shock: The American buyer is presently reeling from $3.00 gasoline. From a world gasoline price perspective, this is very cheap. From the perspective of the American buyer accustomed to buying at less than $2 per gallon it is a real shock. With the recent fall in gasoline prices it appears that customer resistance to buying larger SUVs and pickup trucks is moderating. Longer term, however, we do believe that this latest shock will result in a shift in mix from less fuel efficient vehicles to more fuel efficient vehicles. Still, in the USA it remains that “bigger is better” and many people are still motivated more by fun to drive, power and acceleration than maximum fuel economy.
Individual Manufacturer Forecasts
Naturally, if we totaled the individual forecasts of each vehicle line given by each manufacturer, we would probably end up with a calendar year sales peak of 23,000,000 units.