Welcome!

API Journal Authors: Elizabeth White, Yeshim Deniz, Liz McMillan, Pat Romanski, Rishi Bhargava

News Feed Item

Annual Car Sales Strength Expected To Slow Following Three-Year Trend Of Double-Digit Growth, According To Kelley Blue Book Analysts

Industry Sales Will Continue to Outpace Economic Growth; Affordable Pricing and Credit Environment Keeps Consumers Coming Back

IRVINE, Calif., Feb. 13, 2013 /PRNewswire/ -- New-vehicle sales are expected to grow nearly 6 percent in 2013 to 15.3 million units overall, breaking the three-year trend of double-digit sales growth that has persisted since 2010, according to Kelley Blue Book www.kbb.com, the leading provider of new and used car information

(Logo: http://photos.prnewswire.com/prnh/20121108/LA08161LOGO)

"Although the sales pace is expected to slow this year, automakers have demonstrated that they can generate solid profits with sales at current levels, which is a strong indication that they will remain disciplined by continuing to match production to meet demand," said Alec Gutierrez, senior market analyst of automotive insights for Kelley Blue Book.  "Sales growth won't come easily, especially considering the challenges facing the industry in today's economy.  While economic growth is expected to arrive slowly in 2013, there are several indications that point toward solid auto industry sales growth in the years ahead."

Among the various factors contributing to the ongoing recovery, Kelley Blue Book believes that pent-up demand, high used-vehicle values, improving credit availability and low interest rates all have played a direct role in the auto industry's ability to outperform the economy.  Each of these factors has been critical to-date and will continue to drive sales this year and beyond.

Kelley Blue Book:  New-Car Sales to Hit 15.3 Million Units in 2013


2007

2008

2009

2010

2011

2012

2013

Annual Sales Volume (Millions)

16.1

13.2

10.4

11.6

12.8

14.5

15.3

Auto Industry Sales Will Continue to Outpace Economic Growth
The economy has come a long way since nearly collapsing in late 2008, yet a long road to recovery remains.  At the depths of the recession in 2009, the unemployment rate hit a 30-year high of 10 percent, new-vehicle sales hit a 30-year low of 10.4 million units, and the Conference Board's Consumer Confidence Index hit an all-time low of 25 (for perspective, in 1985 the index was at 100).  Some feared the onset of a second Great Depression in 2009, and while a repeat of the 1930s doesn't appear to be in the cards, the nation still has a long way to go before the economy is completely back on its feet. 

Today unemployment remains at an uncomfortably high 7.8 percent, while consumer confidence is below 60, which is notably better than in 2009 but well below the 4.5 percent unemployment rate and 100+ consumer confidence readings from 2007.  This is important to note since 2007 was the final year of a 10-year span in which the auto industry consistently posted sales of 16 million units or more.  Although the economy has recovered slowly and still has a long way to go before unemployment and consumer confidence are back to levels last seen in 2007, Kelley Blue Book doesn't see a reason why auto sales cannot continue to outperform the pace of the economic recovery.   

"Looking at the historical relationship between unemployment and auto sales from the 1980s through 2007, unemployment would need to be below 6 percent to generate auto sales of 16 million units or more," said Gutierrez.  "According to estimates from the Federal Reserve, unemployment only will drop down to 7.4 percent in 2013 at best; a point that would historically justify sales of only 13 million to 14 million units.  However, since 2010, new-car sales have outperformed their traditional relationship with unemployment, which means that sales in excess of 15 million units clearly are attainable."

Auto sales also have outperformed their historical relationship to consumer confidence by a significant margin.  Despite expectations for consumer confidence to remain well below levels historically required to justify sales of 15 million units or more, Kelley Blue Book believes auto sales will continue to grow as predicted provided that consumer confidence remains stable.

Pent-Up Demand Drives Growth Since 2010, Will Persist in 2013
While economic growth has remained relatively weak and only explains part of the auto sales recovery, Kelley Blue Book sees pent-up demand playing a more critical role in the rebirth of the industry.  According to Polk, registered vehicles in the United States are 11 years old on average; the oldest ever recorded.  The increase in vehicle age can be attributed to two key trends.  First, vehicles have grown much older as consumers have opted to hold onto them longer, due to the weakened economy.  Consumers have focused on deleveraging after the collapse of the real estate bubble, and unless they require a replacement or the model no longer meets the needs of its owners, many are choosing to hold on to their vehicle rather than acquire additional debt to purchase an all-new vehicle.  This leads directly to the second major influence of increased vehicle age, which is improved vehicle quality. 

Aging Vehicles to Continue to Generate Demand in 2013


2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Avg. Registered Vehicle Age

8.9

8.9

9

9.1

9.4

9.5

9.7

9.8

10

10.3

10.6

10.8










Source: Polk

"Vehicles produced during the past few model years are significantly higher in quality than those produced in previous decades," said Gutierrez.  "In the 1990s, consumers came to expect a vehicle produced by a Japanese manufacturer to last 100,000 miles and beyond.  Now we can say the same about vehicles produced by all manufacturers.  Whether shopping for a Toyota, Honda, Chevrolet, Ford or Hyundai, consumers can be reasonably assured that their vehicle will hit 100,000 miles with ease, and 200,000 miles or more with proper maintenance and care." 

With consumers delaying the purchase of a new vehicle due to economic hardship and improved vehicle quality, Kelley Blue Book expects the average age of vehicles on the road to continue to increase.  As vehicles continue to get older and economic conditions slowly improve, buyers are expected to continue to return to market.

Leasing to Aid Sales Growth in 2013
When auto sales hit their low point in 2009, leasing all but dried up.  The lack of lease returns during the past several years has played a pivotal role in the used-vehicle supply shortfall that has driven used-vehicle values to record highs.  The reduced lease returns also have limited the number of consumers that traditionally would be seeking a new vehicle at the end of their lease term.  While this reduced the number of in-market shoppers in recent years, Kelley Blue Book anticipates this trend to begin to reverse in 2013.  Leasing bounced back in 2010, increasing nearly 700,000 units year-over-year.  Kelley Blue Book believes that the return in leasing will generate as many as 300,000 additional in-market shoppers this year, a number that will increase in 2014 and beyond.  With lease returns expected to approach more normal levels during the next few years, Kelley Blue Book anticipates new-vehicle sales to grow and used-vehicle values to soften.

Kelley Blue Book:  Increase in Lease Returns to Drive Boost in Demand for 2013



2006

2007

2008

2009

2010

2011

2012

Total Vehicles Leased

2,446,569

2,453,189

1,935,910

1,083,619

1,709,149

1,960,128

2,284,800

Source: Kelley Blue Book Automotive Insights

Affordable Pricing and Credit Environment Keeps Consumers Coming Back
Consumers looking to purchase a new vehicle in 2013 will find affordable pricing on some of the best vehicles being produced today.  On average, consumers can expect to find new vehicles priced at approximately 94 percent of MSRP, not including incentives.  Not only are transaction prices quite favorable for consumers, but interest rates also remain at historically low levels. 

"Consumers with a solid credit history should have no trouble obtaining a loan for 3 percent or less for up to 72 months," said Gutierrez.  "Many automakers continue to offer loans of zero percent for up to 60 months, as well as rock-bottom lease payments around $160 per month for a compact and only a few dollars north of $200 per month for a mid-size." 

Leases accounted for approximately 18 percent of all vehicles sold in 2012, returning to levels regularly seen prior to the collapse in industry sales in 2009.  Federal Reserve Chairman Ben Bernanke indicated that interest rates will remain near zero through at least 2015, so consumers looking for a new vehicle can expect to find affordable pricing on new models for several years to come.

The affordability of new vehicles has been made even more attractive by the high values maintained by used cars.  Although approximately 8 percent below the all-time highs seen in 2011, late-model used-car values remain uncomfortably close to new-car transaction prices, influencing many consumers to purchase new rather than used.  This phenomenon is most pronounced for high-demand vehicles such as subcompact, compact and mid-size cars.  These vehicles all have been significantly upgraded in recent years and generate excellent fuel economy for an affordable price.  As a result, they have maintained extraordinarily strong values in the used-car market.  In fact, the difference between a five-year payment on a new car and a 1- to 2-year-old used model is as little as $30 per month apart in some cases.  Kelley Blue Book expects used-car values to continue to ease from current highs, so this phenomenon likely will play less of a role in the years ahead.

Kelley Blue Book:  New-Car Pricing Remains Near Used-Car Pricing






MY2013
 (New)

MY 2012 (Used)

MY2011

MY2010

MY2009

MY2008

Average Monthly Payment for a Compact

$335

$302

$280

$253

$224

$202

Source: Kelley Blue Book Automotive Insights

 

For more information and news from Kelley Blue Book's KBB.com, visit www.kbb.com/media/, follow us on Twitter at www.twitter.com/kelleybluebook (or @kelleybluebook), like our page on Facebook at www.facebook.com/kbb, and get updates on Google+ at https://plus.google.com/+kbb/.

 

About Kelley Blue Book (www.kbb.com)
Founded in 1926, Kelley Blue Book, The Trusted Resource®, is the only vehicle valuation and information source trusted and relied upon by both consumers and the industry.  Each week the company provides the most market-reflective values in the industry on its top-rated website www.kbb.com, including its famous Blue Book® Trade-In and Suggested Retail Values and Fair Purchase Price, which reports what others are paying for new cars this week.  The company also provides vehicle pricing and values through various products and services available to car dealers, auto manufacturers, finance and insurance companies as well as governmental agencies.  KBB.com provides consumer pricing and information on cars for sale, minivans, pickup trucks, sedan, hybrids, electric cars, and SUVs.  Kelley Blue Book Co., Inc. is a wholly owned subsidiary of AutoTrader Group.

 

 

SOURCE Kelley Blue Book

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
"My role is working with customers, helping them go through this digital transformation. I spend a lot of time talking to banks, big industries, manufacturers working through how they are integrating and transforming their IT platforms and moving them forward," explained William Morrish, General Manager Product Sales at Interoute, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Just over a week ago I received a long and loud sustained applause for a presentation I delivered at this year’s Cloud Expo in Santa Clara. I was extremely pleased with the turnout and had some very good conversations with many of the attendees. Over the next few days I had many more meaningful conversations and was not only happy with the results but also learned a few new things. Here is everything I learned in those three days distilled into three short points.
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, wh...
Adobe is changing the world though digital experiences. Adobe helps customers develop and deliver high-impact experiences that differentiate brands, build loyalty, and drive revenue across every screen, including smartphones, computers, tablets and TVs. Adobe content solutions are used daily by millions of companies worldwide-from publishers and broadcasters, to enterprises, marketing agencies and household-name brands. Building on its established design leadership, Adobe enables customers not o...
Why do your mobile transformations need to happen today? Mobile is the strategy that enterprise transformation centers on to drive customer engagement. In his general session at @ThingsExpo, Roger Woods, Director, Mobile Product & Strategy – Adobe Marketing Cloud, covered key IoT and mobile trends that are forcing mobile transformation, key components of a solid mobile strategy and explored how brands are effectively driving mobile change throughout the enterprise.
In this strange new world where more and more power is drawn from business technology, companies are effectively straddling two paths on the road to innovation and transformation into digital enterprises. The first path is the heritage trail – with “legacy” technology forming the background. Here, extant technologies are transformed by core IT teams to provide more API-driven approaches. Legacy systems can restrict companies that are transitioning into digital enterprises. To truly become a lea...
What are the new priorities for the connected business? First: businesses need to think differently about the types of connections they will need to make – these span well beyond the traditional app to app into more modern forms of integration including SaaS integrations, mobile integrations, APIs, device integration and Big Data integration. It’s important these are unified together vs. doing them all piecemeal. Second, these types of connections need to be simple to design, adapt and configure...
What happens when the different parts of a vehicle become smarter than the vehicle itself? As we move toward the era of smart everything, hundreds of entities in a vehicle that communicate with each other, the vehicle and external systems create a need for identity orchestration so that all entities work as a conglomerate. Much like an orchestra without a conductor, without the ability to secure, control, and connect the link between a vehicle’s head unit, devices, and systems and to manage the ...
24Notion is full-service global creative digital marketing, technology and lifestyle agency that combines strategic ideas with customized tactical execution. With a broad understand of the art of traditional marketing, new media, communications and social influence, 24Notion uniquely understands how to connect your brand strategy with the right consumer. 24Notion ranked #12 on Corporate Social Responsibility - Book of List.
The Jevons Paradox suggests that when technological advances increase efficiency of a resource, it results in an overall increase in consumption. Writing on the increased use of coal as a result of technological improvements, 19th-century economist William Stanley Jevons found that these improvements led to the development of new ways to utilize coal. In his session at 19th Cloud Expo, Mark Thiele, Chief Strategy Officer for Apcera, will compare the Jevons Paradox to modern-day enterprise IT, e...
Major trends and emerging technologies – from virtual reality and IoT, to Big Data and algorithms – are helping organizations innovate in the digital era. However, to create real business value, IT must think beyond the ‘what’ of digital transformation to the ‘how’ to harness emerging trends, innovation and disruption. Architecture is the key that underpins and ties all these efforts together. In the digital age, it’s important to invest in architecture, extend the enterprise footprint to the cl...
SYS-CON Events announced today that Commvault, a global leader in enterprise data protection and information management, has been named “Bronze Sponsor” of SYS-CON's 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Commvault is a leading provider of data protection and information management solutions, helping companies worldwide activate their data to drive more value and business insight and to transform moder...
SYS-CON Events has announced today that Roger Strukhoff has been named conference chair of Cloud Expo and @ThingsExpo 2016 Silicon Valley. The 19th Cloud Expo and 6th @ThingsExpo will take place on November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. "The Internet of Things brings trillions of dollars of opportunity to developers and enterprise IT, no matter how you measure it," stated Roger Strukhoff. "More importantly, it leverages the power of devices and the Interne...
What does it look like when you have access to cloud infrastructure and platform under the same roof? Let’s talk about the different layers of Technology as a Service: who cares, what runs where, and how does it all fit together. In his session at 18th Cloud Expo, Phil Jackson, Lead Technology Evangelist at SoftLayer, an IBM company, spoke about the picture being painted by IBM Cloud and how the tools being crafted can help fill the gaps in your IT infrastructure.
Digital innovation is the next big wave of business transformation based on digital technologies of which IoT and Big Data are key components, For example: Business boundary innovation is a challenge to excavate third-party business value using IoT and BigData, like Nest Business structure innovation may propose re-building business structure from scratch, as Uber does in the taxicab industry The social model innovation is also a big challenge to the new social architecture with the design fr...
Data is an unusual currency; it is not restricted by the same transactional limitations as money or people. In fact, the more that you leverage your data across multiple business use cases, the more valuable it becomes to the organization. And the same can be said about the organization’s analytics. In his session at 19th Cloud Expo, Bill Schmarzo, CTO for the Big Data Practice at EMC, will introduce a methodology for capturing, enriching and sharing data (and analytics) across the organizati...
DevOps at Cloud Expo, taking place Nov 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long dev...
IoT offers a value of almost $4 trillion to the manufacturing industry through platforms that can improve margins, optimize operations & drive high performance work teams. By using IoT technologies as a foundation, manufacturing customers are integrating worker safety with manufacturing systems, driving deep collaboration and utilizing analytics to exponentially increased per-unit margins. However, as Benoit Lheureux, the VP for Research at Gartner points out, “IoT project implementers often ...
Businesses are struggling to manage the information flow and interactions between all of these new devices and things jumping on their network, and the apps and IT systems they control. The data businesses gather is only helpful if they can do something with it. In his session at @ThingsExpo, Chris Witeck, Principal Technology Strategist at Citrix, will discuss how different the impact of IoT will be for large businesses, expanding how IoT will allow large organizations to make their legacy ap...
Video experiences should be unique and exciting! But that doesn’t mean you need to patch all the pieces yourself. Users demand rich and engaging experiences and new ways to connect with you. But creating robust video applications at scale can be complicated, time-consuming and expensive. In his session at @ThingsExpo, Zohar Babin, Vice President of Platform, Ecosystem and Community at Kaltura, will discuss how VPaaS enables you to move fast, creating scalable video experiences that reach your ...