Edmunds.com Recaps '07, Forecasts '08

By Joe Overby, Staff Writer
January 02, 2008

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SANTA MONICA, Calif. — Edmunds.com recently analyzed various industry trends from 2007 and predicted trends to come in 2008.

The Web site began by naming the most researched cars, minivans, SUVs and trucks.

According to the site, the most researched car on its site for 2007 was the Honda Civic. Moreover, Honda also walked away with second place, with the Accord taking home that honor.

The complete top 10 is as follows.

1. Honda Civic

2. Honda Accord

3. Toyota Camry

4. BMW 3-Series

5. Nissan Altima

6. Mazda3

7. Infiniti G35

8. Toyota Prius

9. Toyota Corolla

10. Acura TL

The top 10 most researched minivans, SUVs and trucks were the following:

1. Honda CR-V

2. Toyota RAV4

3. Toyota Tacoma

4. Honda Odyssey

5. GMC Arcadia

6. Honda Pilot

7. Toyota Tundra

8. Toyota Highlander

9. Acura MDX

10. Saturn Vue

Most of the vehicles on either list, the site indicated, were repeats from 2006. Newcomers included the Acura MDX, Nissan Altima, Toyota Prius, Toyota Tundra, GMC Arcadia and Saturn Vue.

Next, Edmunds.com pointed out three major trends in the industry, the first being the effect of macroeconomic issues on auto sales.

Though gas prices hovered in the $3 range in 2007, sales of compact cars actually increased 2.4 percent from 2006 and SUV sales jumped 5.8 percent, executives highlighted.

The number of days-to-sell in 2007 was 57 for compact cars and 67 for SUVs, with an overall industry average of 64, up 1 from 2006, according to the company.

Meanwhile, the officials explained that the market share of hybrids increased significantly (61.5 percent) as such hybrids as the Toyota Prius saw substantial gains in market share (71 percent increase).

Compact cars grew the most in market share among traditional sectors, jumping from 17.5 percent to 18.4 percent, officials indicated. Minivans fell the farthest, going from 5.1 percent to 4.1 percent.

The second trend Edmunds.com touched on was the widely reported domestic brands falling in market share, down from 55.2 percent to 52.3 percent.

Chrysler declined by 0.1 percent to 12.8 percent in 2007, the company noted, while Ford dropped to 15.6 percent from the 17.4 percent in 2006. General Motors fell to 23.9 percent from 24.8 percent, according to Edmunds.com.

Looking at Japanese brands, Edmunds.com noted they had the best results in market share. Honda, for instance, jumped to 9.7 percent from 9.1 percent for the year.

Nissan inclined 0.5 percent to 6.7 percent and Toyota had the greatest hike in market share, growing from 15.3 percent to 16.3 percent in 2007, officials stated.

Finally, the last trend Edmunds.com noted was flat overall spending on incentives for domestic, Japanese and Korean brands. Meanwhile, European automakers increased incentive spending by 5 percent in 2007.

Breaking it down, executives noted that domestic automakers spent $3,208 per vehicle sold, a drop from the $3,254 the previous year.

Japanese brands increased slightly, spending $1,193 per vehicle sold compared with $1,150 in 2006.

Finally, the company stated that Korean brands essentially spent the same amount, increasing only $2 to $1,777 per vehicle sold in 2007.

Regarding Edmunds.com True Cost of Incentives, the company examined the change in the following six automakers:

—Chrysler increased slightly from $3,796 to $3,812 in 2007.

—Ford declined from $3,410 to $3,105.

—GM jumped to $2,975 from $2,896.

—Honda had a significant climb from $738 to $1,104

—Nissan dropped from $2,314 to $2,049

—Toyota fell slightly to $832 from $838.

Turning their attention to the New Year, Edmunds.com executives also predicted several trends for 2008.

One trend officials forecasted was that light vehicle sales may continue to drop in 2008, as they fell from 15.9 million units sold to 16.15 million in 2007.

"Gas prices and the housing market will continue to help determine what type of vehicles — and how many of them — consumers will purchase in 2008," explained Jesse Toprak, executive director of industry analysis for Edmunds.com.

"With many of next year's macroeconomic concerns already obvious to us, we believe it will be one of the slowest years for auto sales in nearly a decade," Toprak continued.

Other trends Edmunds.com expected are the following:

—New and redesigned models for 2008 could play a big role in attracting customers.

—As consumers look for more fuel-efficient vehicles, sectors such as compact cars, compact SUVs and crossover vehicles could see improvement in market share.

—Hybrid and diesel vehicles could see continued growth in popularity as such vehicles as the Audi Q7, Cadillac Escalade Hybrid, Chevrolet Silverado Hybrid and Volkswagen Jetta BlueTec are unveiled.

—European and Japanese brands will see an increase in incentive spending, while domestic and Korean automakers will stay roughly the same.

—Leasing will remain static in terms of percent of new vehicle transactions and luxury vehicles taking the largest share.

—As consumers try to spend less but "seek a greater sense of security," certified pre-owned sales should increase.

—Consumers will owe more on their car loans than the actual value of the car at an increasing level. According to Edmunds.com, 25.6 percent of customers who traded in used vehicles in 2007 for a new one had negative equity in the transaction.

—Regarding used vehicles, compact cars will continue to have good resale values, but the resale value of midsize cars and large SUVs could fall.

"As in 2007, next year will be a buyers' market for most large vehicles and a sellers' market for the industry's most fuel-efficient vehicles," said Joe Spina, senior remarketing manager for Edmunds.com. "But those hybrid SUVs that cost a lot more than their non-hybrid counterpart will not sell as well."

Edmunds.com Notes True Market Value Deals for December

In other news, Edmunds.com recently released its December True Market Value Deals of the Month, a collection of the new cars, trucks and SUVs with deals that offer the most savings.

The site noted the best deals are separated by seven categories and are assessed based on their TMV price in comparison to its MSRP. Additionally, special loan and lease programs are taken into account.

The December list was as follows:

—2007 Dodge Ram Pickup 1500: $8,000 dealer cash

—2007 Ford Mustang GT Premium: Up to $2,750 customer and bonus cash

—2007 GMC Acadia SLT-1: Zero to 1.9 percent APR up to 72 months

—2007 Honda Civic Hybrid 4dr: $199 per month lease for 36 months

—2007 Hyundai Azera GLS: Zero-percent APR up to 72 months or $2000 customer cash

—2007 Nissan Quest 3.5 SL: APR of 1.9 percent to 3.9 percent up to 72 months or $3,000 customer cash

—2007 Toyota Matrix XR: $1,500 customer cash

"Many dealers are hosting year-end sales to unload their 2007 models," stated Jessica Caldwell, manager of pricing and market analysis for Edmunds.com. "Now is a really good time for consumers to take advantage of these deals."

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