Stable gas <b>prices</b>, younger buyers, expected to push <b>car</b> sales higher |
| Stable gas <b>prices</b>, younger buyers, expected to push <b>car</b> sales higher Posted: 05 Aug 2014 11:22 AM PDT TRAVERSE CITY, MI — (WWJ) Industry experts see stronger car and truck sales continue for a while, with a few possible reasons for concern. The year got off to a tough start, mostly because of rough weather. A warmer spring brought buyers back into showrooms, and they've pushed the annual rate over sixteen million ever since. "We're expecting that sales will be about 16.3 million when all is said and done<" says AutoTrader.com senior analyst Michelle Krebs. "So, a good year." The second half of the year, says Krebs, is generally a good time for pickups. It could be pushed on even more this year, as Ford brings a new F-150 to market. Ford's Chief Economist Emily Kolinski-Morris expects an improving housing market to help pickup sales. But that follows a period of time when truck sales were strong, even with a weak housing industry. "We have seen, fortunately, the activity in the mining and energy sectors picking up a great deal of that slack," she said. "So, the full size pickup segment has actually performed relatively well, even in the absence of a strong housing recovery." Trucks and SUV's–particularly smaller crossovers–have been a big part of the market this year. That's expected to continue. Steven Szakaly, Chief Economist for the National Automobile Dealers Association, sees gasoline prices remaining stable for several years. "We have significant tight oil, shale oil," he said. "These developments are very positive in the long term." Not so positive, says Szakaly, is an unemployment rate that's fallen slower than economists would like. Some who are older, or have been out of work a long time, may see their lives changed permanently. "Many of people who were in the labor force, are not likely to come back." That, Szakaly says, could put a chill on car sales. "As labor force declines, commuting will decline, and clearly people will not be buying as many new cars or used cars as before." Other unknowns include the impact of car sharing, and telecommuting. Both could mean consumers need fewer new cars. Experts speaking at the conference, however, to believe that young people remain interested in purchasing new cars and trucks. It's a matter of lower paying jobs, and higher student loans. But, we've seen sales among the "Millenials" rise so far this year. That fits in with a drop in unemployment among the young, and a rise in their standard of living. "You get a job, pay your student loans off," said analyst Jeff Schuster of LMC Automotive. "You start to have families. You start to have to run around with the kids. I think that all equates to a positive environment for the auto industry." The auto industry remains a cyclical business. Often downward cycles are triggered by outside events. So far, those events haven't had much of an impact, says Ford's Emily Kolinski-Morris, but history has shown that can change quickly. "Of course, we can't understate that at the moment, with the situation in the Middle East, the situation going on with Russia and Europe. All of those have the potential to create some unforeseen consequences." Connect with Jeff Gilbert  |
| ALG Predicts Lowest Used <b>Car Prices</b> Since 2008 - Auto Rental News Posted: 06 Aug 2014 01:00 AM PDT ALG, the benchmark for forecasting vehicle residual values, says a wave of newer vehicles will gradually bring resale values in line with prices before 2008's economic downturn. Due to poor sales years from 2008-2012 — as well as 2009's "Cash for Clunkers" program that took nearly 700,000 vehicles off U.S. roads — used-vehicle supplies have been limited. However, ALG estimates that the June 2014 marked the lowest number of used vehicles available for sale. "The continued strength of new car sales is increasing the availability of high-quality used cars as shoppers continue to trade in their old vehicles," said Larry Dominique, president of ALG and executive vice president at TrueCar. "Additionally, because of the popularity of short 24- and 36-month leases, the drought of used-car supply is already starting to subside. As a result, we expect a steady decline in used-vehicle prices." By 2017, ALG forecasts the average new vehicle will retain 49.4% of its value after three years — in contrast to the 54.6% retention recorded for vehicles through June 2014. Additionally, ALG expects the growing supply of used vehicles should ease the industry back to a 46% residual average by 2019, the same as it was before 2008. "The lower residual values will create a greater gulf between used and new vehicle prices, which could steer more consumers to purchase used vehicles," said Dominique. "Consequently, we expect automakers to increase new car incentives to keep up their current sales pace." To learn more about the used-vehicle supply increase, check out ALG's Industry Report. |
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