NEW YORK – U.S. light-truck market share continues to grow, and will reach 56% this year, up a couple of percentage points, predicts Steve Szakaly, chief economist for the National Automobile Dealers Assn.
He cites relatively low gasoline prices as a reason so many American consumers are being drawn to pickup trucks, SUVs and CUVs.
“Americans like larger vehicles,” he says during a press briefing. “It’s unbelievable, the numbers of people who’ve come back to that market, and are trading in (smaller) vehicles for trucks and utilities.”
The appeal of smaller cars, hybrids and electric vehicles tends to increase when fuel prices are high, and, in turn, wane when pump prices are low.
“Stable gas prices have been a tremendous boon for certain segments,” Szakaly says, but beneficiaries don’t include compact cars. “Hybrids and EVs also took hits.”
But fuel efficiency still matters to most American vehicle owners. One of the appeals of light trucks is their improved fuel economy in recent years, the NADA economist says.
NADA predicts a 1.5% decline in used-car prices, in part because of the brisk new-car market. The trade organization is sticking with an earlier prediction that new-car sales will reach about 16.9 million this year, which would represent a 3% increase over 2014.
Despite the anticipated decline, used-car prices remain “very high from a historical perspective,” says NADA analyst Jonathan Banks.
The quality of used cars and refinements in the way dealers sell them account for a strong pre-owned vehicle market in the U.S.
“The product is better, the purchase process is better and the availability of vehicles is better,” Banks says.
Increased leasing in recent years has led to for more 2- and 3-year-old off-lease vehicles ending up on dealer lots today.
Although some forecasters have warned for nearly two years now of a potential used-car market bubble burst, “NADA was never one of those pessimists,” Banks says.
Improving economic conditions, an onslaught of new products and pent-up demand will continue to drive new-vehicle sales, Szakaly says.
“While economic growth faltered slightly in the first quarter, the outlook for the rest of 2015 is still strong,” he says. “We now expect first-quarter GDP to grow by only 2.1%.”
Gross domestic product in the U.S. will increase 2.9% in 2015, he says. Last year, GDP grew 2.4%, with inflation remaining stable at 1.7%.
Inflation will not be a problem going forward, as a strong U.S. dollar and downward pressure on commodity prices will keep inflation well below the Fed’s official target of 2%, Szakaly says.
Strong employment growth is expected to increase wages. Szakaly previously has expressed concern that sluggish wage growth could hurt new-car sales.
“Wage and income growth will be critical to maintaining the momentum both for the U.S. economy and for motor-vehicle sales for the rest of 2015 and on into 2016,” he says.
