With Q1 2015 about to be in the books, U.S. new-car and light-truck sales are at a running rate of 16.94 million vehicles, a 3.1% percent increase from 2014. In the face of negative winter weather in the Northeast and Midwest regions of the country, new-vehicle sales in January and February were strong. March sales are expected to show a rebound to a SAAR of 16.9 million.
“Improving economic conditions, new vehicles entering the marketplace and pent-up demand will continue to drive U.S. auto sales this year,” says Steven Szakaly, chief economist of the National Automobile Dealers Association. “We now expect first quarter GDP to grow by only 2.1percent, hurt by the west coast port strike, weather impacts and declining oil investments. Car sales will continue to outpace overall economic growth.”
In NADA’s view, stable gasoline prices are leading to a resurgence in demand for SUVs and CUVs, as well as pickup trucks – all of which have taken market share from small, midsize and luxury cars. NADA has forecast that light trucks will make up 56% of the new vehicle market in 2015.
Gross domestic product in the United States will increase by 2.9 in 2015 compared to GDP growth of 2.4, with inflation remaining stable at 1.7%. Inflation will not be a problem moving forward, Szakaly said, as a strong U.S. dollar and downward pressure on commodity prices will keep inflation well below the Fed’s official target of 2 percent.
While inflation will remain low, employment growth is expected to lead to a rise in wages.
“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,” Szakaly thinks. “Housing also has proven surprisingly resilient thus far in 2015, which is a good sign in terms of the underlying strength of the recovery.”
In addition, low oil prices continue to translate into savings at the pump for consumers, which will continue to accelerate motor vehicle sales, he said.
