BANDON, Ore. — CNW Research believes the industry is on the brink of another solid year, with the research firm predicting that total sales will rise between 3.5% and 6%.
Driving the firm’s positive outlook is the stability it’s seeing among the new-car intender base. CNW also noted in its January 2014 newsletter that the consumer psyche is showing real signs of improvement since the economic collapse of 2008.
“While it is highly unlikely the auto industry in 2014 will add a million or more units to the 2013 sales total, a solid increase of 800,000 is well within the realm of probability,” wrote CNW’s Art Spinella.
Spinella predicted that 2014 will be a year that fleet sales return to normal levels, but noted any gains in that market will be largely driven by how well the economy does. “Fleets have spent the past year replacing vehicles kept throughout the recession,” Spinella wrote. “The average age of large fleets in January of this year is 5.3 years, compared to 7.9 years in January of 2013.”
Prior to the recession, Spinella noted, the average age of fleets was 5.1 years.
CNW also believes leasing has reached its peak share among large corporations, the wealthy and small business entrepreneurs. “All leasing growth will now come from the consumer segment, which translates into an almost one-for-one lease-to-sale ratio,” Spinella noted. “People who will lease in 2014 would otherwise have been buyers.”
The firm does expect certified pre-owned sales to grow again in 2014, with CNW research showing that 0.4 new-car sales are lost for each new CPO sale. “CPO becomes a ‘cap’ on new-car sales growth,” Spinella said.
But there is hope for new-car sales, with CNW’s annual wish list showing major gains in new-car purchase intentions. However, adjustments to those intentions reveals about a 3.9 percent growth year over year. The firm’s Jitter Index is also beginning to show some easing in regards home-centric concerns, which means consumers will be in a better buying mood in 2014.
“The fewer worries about family budgets, the more likely consumers are to spend on nonessentials such as upgraded cars and trucks,” stated Spinella, who said overall spending on necessity items has steadily declined in the last quarter of 2013 and again in January 2014 to 35 percent of a family’s disposable income.
Spinella offered another budding trend that could drive vehicle sales this year. “The average age of new-car buyers and first-time lessees is falling and is now in the 43-year range, indicating younger consumers are beginning to feel comfortable adding at least some family debt — boding well for autos.”