Fearless Forecast for 18,000,000 Sales… Yeah, Right!
- March 7, 2008
- Auto XPRT Speaks..., The Car Biz
- Posted by George Peterson
- Comments Off on Fearless Forecast for 18,000,000 Sales… Yeah, Right!
2008 Promises to be Recent Low in New Vehicle Sales
At a recent meeting I was giving a presentation on the State of the Automotive Industry (SOI) in the United States. The SOI includes information on consumer expectations, state of the economy, the growth in nameplates and AutoPacific’s forecast for the industry through 2013. Clearly, the industry is in the dumps in 2008 with sales being forecast to be 15.8-million units. Sales could even be lower with the first two months coming in at a rate of about 15.2-million units.
Record Sales Years on the Horizon
So, in light of this Annis Horribilis (quoting Queen Elizabeth in 1997 “Horrible Year”), the AutoPacific forecast for light vehicle sales going forward peaks at about 18-million units in 2013. That’s after three years when overall sales are higher than the previous 2000 record of 17.3-million units.
Economic Doldrums – Short Term
Several things are keeping sales depressed right now. The sub-prime mess, credit crisis, devaluation of the dollar, slow down in housing, high fuel prices, etc. All negatively impact sales and consumer confidence in wanting to acquire a new vehicle. These issues impact brands and vehicle classes and vehicle lines differently. For instance, full size pickups are hurt because commercial users defer purchases until the housing sector picks again and retail users who have primarily been buying big pickups for personal use can decide not to buy a new one or add one to their family fleets. The dynamics are really churning.
However, the factors stressing out the economy are generally cyclical and right themselves over time.
GenY to the Rescue
But the ace in the hole, as the economy bounces back, is the emergence of Generation Y (Those car buyers who today are 18 to 30 years of age). GenY is the largest population cohort – equaling or surpassing the Boomer generation (43 – 61). They are just now getting into their vehicle acquisition and family formation years, so they will stimulate sales. At the same time, Boomers are not going quietly into the night. They will continue buying new vehicles well after retirement. So, demographic shifts will provide much of the push for higher sales going forward.
Don Esmond at Toyota has said a 20,000,000 unit year by the middle of the next decade would not be surprising. Don’t know about 20,000,000, but 18-million does seem possible.