Light-vehicle sales will fall modestly this year as consumers deal with higher interest rates and less free cash, NADA's head economist predicts.
"We think 16.8 (million) is likely to be the total this year," Paul Taylor said at a press conference in Orlando, Fla., on Saturday. That would be a decline from more than 16.9 million sales in 2005 - a number that Taylor accurately forecast last year at the NADA convention.
"Overall, it's a strong year," he said.
Taylor said he believes there are more reasons to be encouraged than discouraged.
Fuel prices have softened; consumer confidence has returned to pre-Iraq war levels, and dealer confidence is up.
"Dealers are still confident about the future even though their manufacturers are, in some cases, going through a rough period," Taylor said, referring to the NADA Dealer Optimism Index.
According to Taylor, reasons for optimism include:
- Strong sales of large cars. The segment, which is largely dominated by domestic brands, surged 31 percent in 2005 and could rise another 15 to 20 percent in 2006, he predicted.
- Large SUVs are holding their auction resale value, despite increases in gasoline prices over the past two years.
- Vehicle replacement sales are robust in the Gulf states hit by last year's hurricanes.
- Crossover vehicle sales are likely to rise 15 percent in 2006.
- Real economic growth is still healthy, although Taylor predicts a 3.2 percent increase, down slightly from 2005. He said: "It's smaller than 2005, but still good."
You may e-mail Lindsay Chappell at [email protected]