U.S. auto sales should keep growing for the next several years, providing more support to the recent rise in leasing and financing activity, according to Mark O’Neil, CEO of Dealertrack Technologies Inc.
“The majority of OEMs see a very healthy auto market on a multiyear basis, not just 2015 but well into ’16 and ’17,” O’Neil said last week during a conference call for analysts, investors and media.
He added: “I could point to 10 variables that would suggest that the auto cycle has a number of years to go here.”
For example, O’Neil said, new technologies, more fuel-efficient drivetrains, faster product updates, a healthier economy and a healthy environment for auto lending are all stimulating demand.
The lease factor
To those, O’Neil added the rise in lease penetration. He said lease penetration for 2014 should reach an estimated 28 to 29 percent of new-vehicle financing.
According to latest data available from Experian Automotive, leases accounted for 30.2 percent of new-vehicle financing in the second quarter, up from 27.6 percent a year earlier. Leasing accounted for 25.6 percent of total retail volume in the second quarter, up from 23.4 percent a year earlier.
According to O’Neil, “that means there’s almost a critical guaranteed trade-in cycle now on one-third of the new cars being sold coming back to dealerships. We haven’t had that kind of momentum ever in the industry.”
For 2014, Dealertrack said it expects U.S. light-vehicle sales of 16.2 million. U.S. light-vehicle sales in 2013 were 15.6 million, according to the Automotive News Data Center. Dealertrack doesn’t have a 2015 industry sales forecast it could share publicly, a spokesman said.
The company says 45 percent of U.S. retail volume is financed via dealertrack.com. Dealertrack said it has more than 20,334 U.S. dealerships signed up on its credit application network, or more than 94 percent of new-car dealerships, plus 1,511 U.S. auto lenders.
The company said the number of dealerships on the network increased by 0.5 percent in the third quarter vs. the same quarter a year ago while the number of lenders increased 9.7 percent, an indication of lender interest in auto loans.