The Industry's Leading Source For F&I, Sales And Technology

F&I Products

Industry Could Retail 16 Million Units in 2013, CNW Says

December 27, 2012

BANDON, Ore. — If the pieces fall into place, CNW Research believes the industry could retail 16 million units in 2013. The driver will be the need to replace “unencumbered” vehicles, the market research firm said.

According to CNW, of the 112.4 million vehicles sold since 2005, 9.6 million of them are on finance contracts that expire next year. And of those owners who “now or soon” will have an unencumbered vehicle, CNW’s Art Spinella said nearly 48 percent say they are inclined to replace the car or truck with a new model within 12 months.

“That is a potential of 4.37 million buyers — about 60 percent higher than in 2008 and just a notch below 2004,” Spinella wrote in his firm’s December newsletter.

“As pointed out in October, consumers are still a bit edgy about their home-centric condition,” Spinella continued. “But with the exception of federal taxes, all of the metrics showed improvement in both November and December. That’s a trend that foretells a bit of easing on the stress side of consumer attitudes.”

What could also help, Spinella added, are the bevy of new and higher fuel-economy vehicles introduced this year, as well as possible economic improvements in California and Florida. A return to normalcy in the construction trades could also help.

How the year plays out will depend on Washington, D.C., said Spinella. “Without some form of economic stability in both the budget and spending, the underpinning of the U.S. economy could slip and cause psychological damage to consumer sentiment and spending,” he wrote. “But if all the pieces fall in place, the industry could well see a third and fourth quarter sales surge pushing total sales above 16 million units.”

As for December, CNW said the industry — based on the opening to weeks of the month — is on track to sell 1.4 million units for a 16.2 million-unit delivery rate (similar to the seasonally adjusted annualized rate). If the industry maintains that pace, it would realize an 11 percent increase in sales vs. 2011.

Closing ratios were up more than 13 percent vs. a year ago in the opening weeks of December, while floor traffic was up 11.6 percent. Same-store sales were already ahead of last year by 9 percent, with the subprime approval rate increasing more than 43 percent compared to December 2011.

Lease share also climbed 8.7 percent in the opening days of the month vs. a year ago. And most of those transactions involved short-term lease deals, laying the groundwork for a healthy future for CPO and overall market sales, Spinella wrote.

“Pent-up demand remains in the near-100,000-unit range, although it is 3 percent behind a year ago,” Spinella noted. “But much of the decline can be attributed to consumers who postponed a purchase in the past finally coming to market.”

Spinella, however, added one additional bright spot: “Of those consumers who say have put off a new-vehicle purchase, the length of time for the postponement has shrunk to a modest 3.4 months.”

Your Comment

Please note that comments may be moderated. 
Leave this field empty:
Your Name:  
Your Email: