NADA: Auto Sales to Accelerate


U.S. sales of new cars in 2015 will rise to nearly 17 million units, according a new forecast from the National Automobile Dealers Association. The groups Chief Economist Steven Szakaly stated in a November teleconference, Rising employment and wages, continued low interest rates and lower gasoline prices all signal an increase in new light vehicle sales in 2015.

The U.S. economy has come back slowly yet surely with a 3.1 percent growth expected next year that hasnt been seen in over six years, he added. Different factors will influence the 2015 market: global gross domestic product, oil prices and employment.

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NADAs forecast says that sales of new cars and light truck sales seems to be on track 2014 seems to be on track to hit 16.4 million units, he said. GDP will grow at 2.1 percent in 2014, with stable inflation anticipated for November and December.

Looking ahead to 2015, 16.9 million new cars and light trucks will be purchased or leased in the United States, the association predicted. This would be tremendous growth from 2009 and 2010, when light vehicle sales were about 10.4 million and 11.6 million units, respectively, according to NADA data. The increase in car sales for 2015 could have a positive effect on lubricant sales.

A key factor that will influence next years sales is the price of oil. Lower oil prices, which translate into lower prices at the gas pump for consumers, increases household spending on other goods and services, resulting in higher growth, said Szakaly, who is based in McLean, Va. If oil and gasoline prices remain low through 2015, we could easily see consumers return in even greater numbers to the light-vehicle market during the second half of 2015.

During the Nov. 17 conference call, he stated that cheap gasoline will add about 200,000 to 250,000 sales next year, with light truck sales accounting for about 54 percent to 55 percent of the increase. NADAs current forecast is for West Texas Intermediate (WTI) crude to average $71 to $73 per barrel for the first half of 2015 and then rise to $83 for the second half.

Responding to questions, Szakaly commented that gasoline prices are expected to remain stable and low next year and potentially for two years after. That, combined with more efficient vehicles, should aid a continued shift of consumers away from passenger cars and towards bigger vehicles.

Were seeing some very, very strong gains in terms of fuel economy on pickup trucks and on sport utility vehicles, he said. When you couple that with an outlook for lower gasoline prices, it would indicate a very good market for light trucks and SUVs. Szakaly said that for U.S. sales to top 17 million in 2015, automakers would have to spend more on incentives and sell more cars to younger buyers than they have this year.More U.S. buyers need to return to the labor force, wages have to grow and interest rates need to remain stable for sales to top 17 million units next year.

Looking beyond the U.S. market, China will slow to an average GDP rate of 6.4 percent in 2015 and possibly 5.9 percent in 2016. This has the potential to harm U.S. exports and hurt profits at companies that are dependent on the market in China. Declining demand from emerging markets for commodities and raw materials, especially China, will ease pressure on prices for U.S. companies, he said. In addition, a stronger U.S. dollar will further dampen inflationary pressure by maintaining downward momentum on import prices for goods and services.

Europes GDP will likely grow about 1.4 percent in 2015. With both China and Europe having slower rates, this will slow down U.S. exports to these regions.

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