There’s good economic news on the horizon for auto dealers, according to Steven Szakaly, the NADA’s Chief Economist.
Szakaly delivered his upbeat outlook at a press briefing at the opening day of the National Automobile Dealer Association’s (NADA) Convention & Expo in San Francisco, Calif.
“The U.S. economy is poised to accelerate in 2015,” says Szakaly. NADA’s economic outlook calls for gross domestic product in the U.S. to be up 3.1 per cent in 2015, with the potential for growth to exceed that level. “We expect very, very strong growth for the U.S. economy.”
This growth, fueled by a range of factors, such as lower gasoline prices and continued low interest rates, will lead to an estimated 16.94 million new cars and light truck sales in 2015.
The NADA predicts these sales will consist of 44 per cent cars and 56 per cent light trucks and SUVs.
“Customers are more able to spend for extras because of declining gasoline prices and continued low interest rates,” says Szakaly.
He also expects there to be “virtually no inflation” and for there be to growth in housing starts, fueling steady car purchases.
One negative factor he cited was the lack of growth in wages in the U.S. economy since 2007. “Wages and income have not risen,” he said. “This issue has to be resolved,” adding that the lack of wage growth presents a risk to the U.S. economy.
Jonathan Banks, Executive Automotive Analyst, with NADA Used Car Guide also presented an update on the state of the used car marketplace.
“2014 was another banner year for used vehicles,” said Banks, adding that prices increased 1.1% in 2014 vs. 2013 levels.
2014 was also a good year in terms of vehicle deterioration, with a 14% rate being one of the lowest levels witnessed since 1997.
He said there are some concerns over the rise in long-term leases being offered with what he called “ridiculous” low payments.
But he said franchised auto dealers have greatly improved the way they manage their used car business in the past ten years. “The fundamentals are better than before,” says Banks. “But there are some risks that could occur in 2016 and beyond.”
The NADA Convention & Expo continues until Sunday January 25. Check out Canadian auto dealer online for more news about this year’s event.