An aging automotive fleet and strong used-car prices will help drive demand in the new-vehicle market, says an analyst with R.L. Polk.
Pratt: “I don’t think we’ll see 17 million again anytime soon.”
TRAVERSE CITY, MI – U.S. car and truck sales could reach 16 million units in 2014, Anthony Pratt, director of forecasting-the Americas at R.L. Polk predicts in a Management Briefing Seminars session here.
That’s a 12% improvement from the 14.3 million units he forecasts for this year. His 2013 outlook calls for 15.2 million deliveries.
Pratt cites several reasons for his bullish outlook, including pent-up demand following the 2008-2009 recession, an aging automotive fleet and strong used-car prices fueled by a shortage of these vehicles, which narrows the gap with new-vehicle prices.
“I don’t think we’ll see 17 million again anytime soon,” he says, referring to the record set prior to the recession.
Pratt warns of “significant” risks in analyzing the global market, especially related to the Middle East, which supplies 60% of U.S. oil.
The market also may be impacted by the fact owners are keeping their vehicles longer, thanks in part to higher overall quality. Longer-term this could mean the average buyer will purchase nine vehicles over his lifetime, compared with 12 vehicles currently, Pratt underscores.
As a result, suppliers may have to keep replacement parts for older vehicles in production longer. That has implications for their capital-investment plans, he adds.
One surprising finding of Polk’s studies is that the longer a buyer owns a vehicle the less likely he will remain loyal to the brand when purchasing a replacement.
Pratt theorizes that the proliferation of new or substantially changed vehicles – 121 are slated for the ’13 model year – provides a wider array of choices for car shoppers as they turn in their old vehicles.
“There’s going to be a battle for U.S. market share as OEMs promote these new models and seek more conquest sales,” he says. “Incentives will also play a larger role in coming months.”
Pratt forecasts global vehicle sales, and coincidentally U.S. sales, to each grow 34% between 2011 and 2017, with the BRIC markets (Brazil, Russia, India and China) collectively growing 56%.
China’s demand alone will increase 59% over that period, but gains will come from smaller cities rather than Shanghai and other big markets plagued by congestion and smog, he suggests.