ORLANDO, Fla. -- Light-vehicle sales will fall modestly this year as consumers deal with higher interest rates and less ready cash, NADA's head economist predicts.
"We think 16.8 (million) is likely to be the total this year," Paul Taylor said last week at the NADA convention. That would be a decline from more than 16.9 million sales in 2005 - a number Taylor accurately forecast a year ago.
Taylor said he believes there are more reasons to be encouraged than discouraged: Fuel prices have softened; consumer confidence is back 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, citing the NADA Dealer Optimism Index.
Taylor sees these reasons for optimism:
- Sales of large cars are strong. The segment, 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 high fuel prices the past two years.
- Replacement sales are robust in states hit by hurricanes in 2005.
- 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.
Said Taylor: "It's smaller than 2005 but still good."
You may e-mail Lindsay Chappell at [email protected]