During the J.D. Power and Associates’ International Automotive Roundtable, held just prior to this year’s National Automobile Dealers Association Convention and Expo in Orlando, Fla., on Friday, John Humphrey, senior vice president of J.D. Power’s global automotive operations, said he expects demand for new cars and trucks to be slower but steadier through 2015.
Humphrey cited improvements in the U.S. economy, such as an increase in housing starts, the introduction of a significant number of new or refreshed cars and trucks, plus improved credit availability as key factors in driving growth. He also went on to say that this growth is immediate, with dealers already seeing better profitability and OEMs actually building to demand, instead of filling the pipeline with excess inventory just to keep factories ticking over.
J.D. Power and Associates’ John Humphrey
Current statistics put the OEMs at using 84 per cent of their production capacity which is considerable higher than in recent memory and although in the U.S. overall new vehicle dealer count is down (17,500 stores versus 20,000 in 2009) those remaining facilities are more profitable.
Humphrey also said that growing strength in the leasing market (leasing was up to 21 per cent last year, from 13 per cent in 2009) and an increasing number of sub-prime buyers are also expected to help fuel the boom.
However, Humphrey also noted that caution should be exercised. He warned that the ongoing debt crisis in Europe, the geopolitical situation in parts of the Middle East and Asia, such as tensions in Syria, Tunisia and Iran, along with a U.S. government that’s still struggling to sort out its fiscal policy, could derail economic growth.
