Pricing: The extra icing on the cake in a great year

The counting’s done, so it’s official: 2014 was a great year.

We can all rattle off lots to celebrate: fifth straight year of sales growth, 13 brands setting U.S. sales records, 6 million-plus units higher than 2009 and more growth forecast for 2015.

But for me, one feel-good factoid trumps everything. The industry’s average transaction prices are still rising. Bottom line: Automakers are netting more per vehicle than ever, even with all those frantic December closeout spiffs.

That’s the best sign that the boom times aren’t over yet.

As much as we all savor these good times, since the Great Recession everybody in the car biz is a bit paranoid about bad old habits.

We love the growth, the profits and the stability of a really long economic expansion. We know the industry has earned that by matching production to demand, by self-discipline and hard work.

But five years of growth is a long time. So forecasts for 2015 becoming a sixth straight growth year may make sense, but also make our teeth itch.

After all, the last six-year string of U.S. auto sales increasing was 1921 through 1926.

So we fretfully scan for the first sign that automaker discipline is slipping and that we’re about to tumble over the edge into darkness again.

When will this business cycle nose over from expansion to contraction? Everybody has a different trigger point for worry. Mine is two-stage.

When net margins stop growing, that’s when I start looking for market peak on auto sales volume. Now, an absolute decline in the number of sales isn’t in itself the end of good times. But in my experience, that’s when some managers switch thinking to focus more on maintaining market share than making profits. That’s when folks swing from playing offense to playing defense.

Last year at this time, I was optimistic about both 2014 and 2015. Thanks to an improving U.S. economy, I still feel good about 2015 and upbeat into 2016 and beyond.

Anybody who survived the Great Recession will always view the future with unsentimental eyes. But 2015 has few clouds on the horizon.

As farmers say, make hay while the sun shines.

You can reach Jesse Snyder at jsnyder@autonews.com -- Follow Jesse on Twitter: https://twitter.com/spartyjesse

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