Sales Forecasts

6 factors expected to impact UK auto market most

LONDON - 

Analysts who compiled White Clarke Group’s United Kingdom Asset & Auto Finance Survey 2017 say that the U.K. finance market has been resilient in the face of historic changes in the past year, but challenges will remain in 2017 and beyond.

The firm noted its survey points to a series of key factors that will have the greatest impact on the market, including:

• Brexit

• Legislation

• Vehicle sales (new and used)

• Residual values growing demand for PCH

• New technology and innovation

• P2P lending

“The first and most encouraging point to note is that the asset and auto finance market not only continued to grow in 2016, in spite of fears of what might happen in the aftermath of the vote to leave the EU and wider concerns about the global situation, it has carried on growing into 2017 and shows little sign yet of slowing,” White Clarke Group chief executive officer Brendan Gleeson said in the report.

“Nonetheless, there are genuine concerns about the potential effects of Brexit, even though the Article 50 starting pistol has only just been fired and the UK won’t be exiting the EU until 2019,” he continued.

Gleeson went on to say, “One outcome is that auto finance deals are expected to remain very competitive. Dealers need to ensure customers genuinely understand the benefits of finance. Keeping up with developments in finance technology is paramount.”

The complete survey report can be downloaded here.

White Clarke Group’s 20th annual examination of global leasing

LONDON - 

This week, White Clarke Group released its 20th annual Global Leasing Report, what the company contends is the only guide to the top 50 leasing markets in the world, summarizes leasing volumes and other market trends.

Officials highlighted the report reveals an optimistic industry outlook with positive growth and continued confidence.

White Clarke Group calculated overall global volumes reached the $1 trillion milestone as leasing “finally shrugged off the effects of the great recession, with growth in the industry outperforming that of the overall economy.”

The report showed North America remained top of the world’s largest leasing regions, increasing its lead on Europe, and the United States remained the world’s largest leasing market by double-digit growth.

Analysts said Europe performed well as its two largest and most mature leasing countries, U.K. and Germany, continued to improve, with the U.K. achieving a 14-percent increase. The rise within both of these markets was driven in part by auto finance.

White Clarke Group went on to mention Asia showed the fastest growth of any region as China continued its rapid rise towards top place, expanding its leasing market more than 25 percent in one year. Business volumes were driven by infrastructure, manufacturing and a resilient car market.

White Clarke Group chief executive officer Brendan Gleeson said, “2016 brought some significant economic and political events, namely Brexit and the election of Donald Trump as U.S. president. Both events have brought short-term volatility on the global foreign exchange and stock markets.

“It is too early to assess how these events impact upon the economies of the world and the global leasing industry in the medium term, but there may be some resulting economic instability in 2017,” Gleeson added.

The report can be downloaded here. Analysts also discussed the report in a video available here and at the topic of this page.

3.4 million used-car sales possible in February

CARY, N.C. - 

In the first two months of the year, the pre-owned side of the auto industry is pacing towards another year in the neighborhood of 38 million sales.

Edmunds is predicting February used-car sales of 3.4 million units. That forecast would translate into a SAAR of 37.9 million. There were 3.0 million used-car sales in January and the SAAR was the same. 

Offering a milder forecast, ALG anticipates a possible 3.17 million used-vehicle sales this month, which would beat year-ago figures by 7.9 percent.

Separately, in its latest Used Car Market Report, Edmunds said there was a total of 38.51 million used vehicles sold last year, which beat prior-year figures by 0.6 percent.

Franchised dealers sold 11.57 million used cars in 2016, and a record 22.8 percent were certified pre-owned, according to the report. There was also a record  2.64 million CPO cars sold last year, Edmunds said.

​Below is how used-vehicle sales overall have trended over the last six years, according to Edmunds:

  • 2011: 36.92 million
     
  • 2012: 37.58 million
     
  • 2013: 35.83 million
     
  • 2014: 36.24 million
     
  • 2015: 38.28 million
     
  • 2016: 38.51 million 

 

Showroom traffic for used-cars firm, but down for new

IRVINE, Calif. - 

Car sales in December closed exceptionally strong because there was likely a pull forward effect, especially given a number of attractive incentives offered across the industry.

January may be suffering a bit of a hangover after the impressive deals seen at the end of last year, according to, Alec Gutierrez, senior analyst for Kelley Blue Book, and Michelle Krebs, senior analyst for Autotrader

The senior analysts hosted February’s automotive sales day conference call on Wednesday.

It looks as if new-car shoppers are “taking a bit of a breather,” said Krebs.

“Dealers are telling us showroom traffic for new cars is down a bit, and they’re telling us used-car traffic remains pretty firm,” she said.

Gutierrez explained that the year ended with a lot of incentives and that January is generally heavy for incentives as well.

“Industry incentive spend in December was close to $4,000 per unit so there are likely a lot of consumers who jumped ahead to take advantage of year-end closeout sales,” said Gutierrez.

He said the environment across the board is still relatively strong and conducive towards a continued strength.

“The unemployment rate remains very low at below 5 percent and consumer confidence remains relatively steady,” Gutierrez added.

He said he expects January to closeout at a new-car annual selling pace of about 17.4 million units overall.

“For the year, right now we’re bench marking sales likely in the low 17 million, 17.2, 17.3 (range) — somewhere around there,” said Gutierrez.

“I think consumers will still not have an issue getting affordable financing on a new- or used-car purchase or lease for that matter — which remains at 30 percent penetration.” 

January used sales could jump nearly 8%

CARY, N.C. - 

While multiple projections have new-vehicle sales off to a somewhat sluggish start, the forecasts for used-vehicle sales in the opening month of 2017 offer much more upbeat expectations.

Edmunds estimated 3.1 million used vehicles will be sold in January, which could computed into a seasonally adjusted annual rate (SAAR) of 38.4 million. Both of those metrics are higher compared to 2.6 million sales or a SAAR of 38.2 million that Edmunds reported for December.

Meanwhile, the used-sales forecast from ALG is even more hopeful. Analysts there said total used auto sales — including deliveries at franchised and independent dealerships as well as private-party transactions — may reach 3,139,957 this month. Should the industry hit that mark, it would represent a 7.9-percent lift versus January of last year.

Conversely, here is the rundown of new-model sales expectations for the month.

Edmunds forecasted that 1,153,459 new cars and trucks will be sold in the U.S. in January, for an estimated SAAR of 17.7 million. This expectation reflects a 31.5-percent drop in sales from December and a 0.7-percent dip from January of last year.

“January had the potential of being a very slow month at dealerships, given the fact that auto sales shattered records in December,” said Jessica Caldwell, Edmunds executive director of industry analysis.

“But January is shaping up to be a surprisingly healthy month. The economy continues to show signs of strength and consumers are feeling confident, boosting auto sales above initial expectations,” Caldwell added.

Over at ALG, its new-vehicle sales prediction carried similar themes.

ALG projected total new-vehicle sales, including fleet deliveries, will reach 1,130,500 units in January, down 1.5 percent from a year ago. The forecast would leave this month’s SAAR at an estimated 17.5 million units for the month, down from an 18.4 million-unit SAAR a year ago.

Excluding fleet sales, U.S. retail deliveries of new cars and light trucks should remain flat with 923,369 units, according to Eric Lyman, ALG’s chief industry analyst

“Exceptionally strong sales to close out 2016 led to a slow start in January, but additional incentives towards the end of the month helped pick up the slack,” Lyman said.

Lyman mentioned incentive spending by automakers averaged an estimated $3,635 per vehicle in January, up 21.6 percent from a year ago, and down 3.3 percent from December.

“On a year-over-year basis, Honda is gaining about 0.5 percent market share on the continued popularity of its new products in the compact utility and pick up segments,” Lyman said.

While the team at Kelley Blue Book doesn’t make used-vehicle sales predications, its analysts said new-vehicle sales are expected to decrease 3 percent year-over-year to a total of 1.13 million units in January, resulting in an estimated 17.4 million SAAR.

Kelley Blue Book senior analyst Alec Gutierrez acknowledged incentive spending is a concern as it continues to rise across the industry. Gutierrez explained another record in 2017 would likely require undisciplined sales tactics driven by incentives, leasing and longer loan terms. 

KBB’s new-model sales forecast 2017 calls for turns in the range of 16.8 to 17.3 million units, which would represent a 1 to 4 percent decrease from 2016.

“After a record December capped a new record year of vehicles sales in 2016, January figures appear to be enduring a hangover effect, potentially falling more than half a million units from the previous month,” Gutierrez said.

“However, January is typically the weakest month of the year for sales, as winter weather sets in and consumers recover from big spending over the holiday season,” he continued. “In addition, many potential sales were likely pulled ahead into December as consumers opted to take advantage of the ample inventory and incentives available industry-wide.”

Auto industry leaders predict 2017 used-car sales

CARY, N.C. - 

Used-car sales are predicted to do well in 2017, following what was a record year for used-car sales, according to two automotive industry leaders. 

In an AIADA AutoTalk webinar in late December,  KAR Auction Services chief economist Tom Kontos and David Lim — vice president and equity analyst at Wells Fargo Securities — discussed last year’s used-car sales and what to expect this year.

“It looks as if the cars that are coming back off lease, as repos, as trade-ins, as off-rental or as off fleet units are all finding a new home in the retail side of the business,” said Kontos. “Used-car sales through November, according to NADA data, for franchise dealers are up 3.6 percent; and for independent dealers, used-car sales are up 6 percent.

“So, the retail sales of used cars, if you combine those, they’re in the 4.2 percent range, which is pretty much exactly the rate of growth in supply (in 2016) at auction.”

Lim also agrees that used vehicles should do well in 2017. He said public auto dealers have been vocal about the opportunity in used vehicles, as many have launched standalone used-car outlets. 

“There’s definitely opportunity where you know these franchise dealers are going to get first dibs and in our view, I think having first dibs is actually a benefit for guys that also have standalone stores where they could feed those stores with the inventory,” he said.

They also touched on the certified pre-owned market.

Autodata Corp. reported that there were 2.64 million CPO sales in 2016, which was the sixth straight best-ever sum for this rapidly expanding market.

Lim said CPO programs are attractive and bring customers into the fold who can’t afford a brand-new luxury vehicle, but can purchase a CPO and maybe someday down the road buy the brand new version of their CPO vehicle.

“The impression that I have is that (2017) could be a pretty good year for used vehicles,” Lim said.

November likely to reach at least 2.8M used-car sales

CARY, N.C. - 

In a forecast released Tuesday, TrueCar projects close to 2.86 million used-vehicle sales this month, which would be a 6.1-percent year-over-year slide.

Last week, Edmunds.com called for roughly 2.8 million used-car sales in November, which would be down from 3.1 million in October. The seasonally adjusted annualized rate for used-car sales, however, is likely to climb from 37.8 million to 37.9 million.

This follows a third quarter with 9.76 million used-vehicle sales, according to Edmunds’ latest Used Vehicle Market Report. That was up from 9.45 million in Q3 of 2015.

Franchised dealers accounted for 2.92 million used sales in the third quarter, Edmunds said, which was off 2.6 percent.

The National Automobile Dealers Association is forecasting 15.1 million used-car sales by franchised dealers this year, followed by 15.3 million used sales in 2017.

NADA also projects that there will be more than 40 million total used-car sales next year. 

11 findings from post-election shopper survey

CAMBRIDGE, Mass. - 

CarGurus conducted a survey of more than 1,000 U.S. consumers to gather their opinions around how the recent presidential election will impact the automotive industry and their plans to buy a vehicle.

Overall, survey findings showed many expect both vehicle and gas prices to increase, and even more expect to see fewer government incentives for environmentally friendly vehicles, but that will likely not impact the decision to buy one.

CarGurus learned the following based on the presidential election results:

• 35 percent think auto prices will increase.

• 8 percent think auto prices will decrease.

• 57 percent think auto prices will stay the same.

• Almost half (46 percent) think gas prices will increase.

• Almost one quarter (21 percent) think gas prices will decrease.

• Almost one third (32 percent) think gas prices will remain the same.

In addition, the survey uncovered the following:

• 70 percent noted that the election will have no impact on their decision to buy a U.S. or foreign-made vehicle

• 75 percent expect to see fewer government incentives to buy efficient models like electronic vehicles and hybrids, and 25 percent expect to see more

When asked what impact a reduction in government incentives would have on the likelihood to consider purchasing an electric vehicle:

• 67 percent said it would not have an impact on their decision

• 17 percent said they would be much less likely to consider an electric vehicle

• 16 percent said they would be somewhat less likely to consider an electric vehicle

The CarGurus survey also found that younger respondents were more skeptical in their post-election opinions. They were more likely than older shoppers (ones 55 and older) to believe gas prices will increase, with 60 percent of 18 to 24 year olds thinking gas prices will increase as opposed to 44 percent of respondents aged 55 or older.

Additionally, almost 10 percent of younger shoppers also said they would delay decision to buy a vehicle and almost 10 percent of 25 to 34 year olds planning to spend less on the vehicle since the election.

“Our survey uncovered that while the election may have produced a level of uncertainty related to some issues like car and gas prices, others such as an affinity towards an electric vehicle remain largely unaffected,” said Sarah Welch, senior vice president of consumer marketing at CarGurus.

“It will be interesting to watch how this unfolds over the coming months and years, especially with the theme of financial prudence and caution coming from the younger generation,” Welch added.

The survey’s full findings can be found here.

‘Frozen out’ new small-car shoppers turn to used or stay home

CARY, N.C. - 

When it comes to smaller new-car segments, one of the trends at play in the slowdown is “an affordability issue,” says Autotrader senior analyst Michelle Krebs.

 “There are just many consumers who are being frozen out of the new-car market,” Krebs said during the Q&A portion of sales day conference call with the media on Tuesday. “And I think it’s having some impact, especially on that small-car market, because that’s where you’d typically see very budget-minded people going to.

“And people are keeping their cars longer, so it suggests that … consumers are challenged at that end of the market, too, financially,” she said.

So,  where are those would-be buyers who are “frozen out” going?  Are they turning to late-model and certified pre-owned, or perhaps heading toward independent dealer lots? Or are they out of the game altogether?

“We haven’t broken out who’s doing what, but we certainly think that it’s a factor, because wages have not gone up and yet prices of everything — health care, education, et cetera — have gone up, as have car prices,” Krebs said. “And so people are holding on to their cars longer.”

Citing Polk data, she said the average age of a vehicle on the road is 11.5 years old, adding that “despite record new-car sales, that’s gone up.”

“And we are seeing a robust used-car market. So they’re either not playing the game yet or they are buying used,” she said. “So, I think a lot of those might have been a possibility for the compact market, and they’re just frozen out.”

 

 

 

More Republican shoppers than Democrats to be impacted by election

CINCINNATI - 

With just saying the last names of the presidential candidates often triggering intense reactions, Swapalease.com on Tuesday released results of its 2016 Election & Cars survey, revealing interesting findings that show the differences in how the two parties view aspects of the automotive industry.

When it comes to how the election might impact how dealers move metal, more than three-quarters of respondents (77.1 percent) said election results wouldn't likely have an impact on when they replace their car. Meanwhile, just over 16 percent said it could impact their decision, while under 7 percent said it would definitely have an impact, depending on the winner. 

That said, Swapalease noted that 25 percent of Republicans said the election could impact when they buy. 

Swapalease presented the online survey in front of 2,500 drivers across the U.S. during September. Of those participants, approximately 41 percent said they are registered Republicans, with 27 percent showing as Democrats.

While 68 percent were male and 32 percent female, two-fifths of survey takers (39 percent) said they were planning to vote for Donald Trump with 36 percent opting for Hillary Clinton.

When asked how long they typically keep their vehicles, both Republicans and Democrats picked between 21 and 36 months. However, roughly a third of women (32 percent) said longer than five years and 34 percent of men said between 21 and 36 months.

The majority of Democrat drivers (60 percent) said they’re most worried about high repair and/or maintenance costs when it comes to their vehicle. Most Republican drivers (58 percent) cited escalating costs of cars and trucks as their biggest concern.

Two-fifths of respondents said Volkswagen should be “ashamed of itself” over the scandal. However, many Democrats said they will never get another Volkswagen again; whereas more than twice as many Republicans said they wouldn’t want to fix the car’s issue.

Interestingly enough, when analyzed by gender, Swapalease.com found that 42 percent of men said Volkswagen should be ashamed of itself,  and more than a third of woment (36 percent) weren’t aware of any scandal associated with the brand.

Here are the complete results from the survey:

1. Do you consider yourself a car enthusiast?

I love cars – 60.88 percent

I like cars but would not consider myself a car enthusiast – 33.10 percent

Cars are just a mode of transportation for me – 6.02 percent

2.  What is your vehicle preference?

Car – 65.51 percent

SUV – 28.85 percent

Truck – 7.64 percent

3. Which of the following vehicles most describes your personality?

Tesla – 43.02 percent

Chevy Corvette – 27.44 percent

Honda Accord – 10.23 percent

Ford F-150 – 8.60 percent

Hummer – 8.14 percent

Chevy Volt – 2.56 percent

4. What political affiliation do you consider yourself?

Democrat – 26.64 percent

Republican – 41.36 percent

Independent – 32.01 percent

5. If you had to vote today, who would you vote for?

Trump – 39.34 percent

Clinton – 36.30 percent

Someone Else – 34.36 percent

6. Which of the following best describes the personality of this year’s election?

A driverless car – 34.03 percent

A four-wheel SUV going off road where ever it wants – 29.84 percent

A Volkswagen where what see, may not be what you get – 18.41 percent

Battle of the hummers – 16.32 percent

Chevy Volt – 1.40 percent

7. What kind of car do you think Hillary Clinton prefers to drive?

Mercedes-Benz GL Class – 13.38 percent

Cadillac Escalade – 12.68 percent

Mercedes-Benz E Class – 11.50 percent

BWM 5 Series – 5.40 percent

Cadillac CTS – 5.16 percent

Buick Lacrosse – 4.23 percent

Chevrolet Suburban – 3.76 percent

Lexus RX – 3.76 percent

Audi A6 – 3.29 percent

Mercedes-Benz C Class – 2.35 percent

BWM X Series – 2.11 percent

Buick Regal – 2.11 percent

GMC Yukon – 2.11%

Subaru Legacy – 2.11%

Toyota Corolla – 2.88%

8. What kind of car do you think Donald Trump prefers to drive?

Cadillac Escalade – 28.07 percent

Mercedes-Benz GL Class – 16.75 percent

Mercedes-Benz E Class – 11.32 percent

BMW 5 Series – 6.84 percent

Cadillac CTS – 5.42 percent

Audi A6 – 3.77 percent

BMW X Series – 3.30 percent

Chevrolet Suburban – 3.07 percent

GMC Yukon – 3.07 percent

Mercedes-Benz C Class – 2.36 percent

Ram 1500 – 1.89 percent

Volkswagen Jetta – 1.42 percent

Ford F-150 – 1.18 percent

Infiniti QX80 – 1.18%

Ford Expedition – 0.94%

9.  How long do you currently keep cars for?

6 - 12 Months – 33.06 percent

12 - 20 Months – 10.82 percent

21- 36 Months – 32 percent

36 - 48 Months – 18.82 percent

48 - 60 Months – 9.18 percent

Longer than 5 years – 26.12 percent

10. Are the elections results likely to affect how often you replace a car?

Not very likely – 77.10 percent

It could have an effect on me – 16.12 percent

Most definitely, depending on who wins – 6.78 percent

11. Which of the following are you concerned about when it comes to cars?

The prices are getting too high – 56.22 percent

Concern over high repair and/or maintenance costs – 53.11 percent

Cars are getting too complex and complicated – 17.46 percent

Subprime loans are getting out of control – 14.59 percent

Autonomous vehicles will ruin our roads – 11 percent

12.  What do you think of Volkswagen scandal?

Volkswagen should be ashamed – 39.81 percent

Not cool, but I still wouldn’t get it fixed – 21.06 percent

I was not aware of any scandal – 13.66 percent

They were wrong, I will never get a VW again – 13.43 percent

Nothing wrong, the cars perform better – 12.04 percent

13. What is your gender?

Female – 16.32 percent

Male – 83.68 percent

14. How old are you?

18 – 29 years old – 6.98 percent

30 – 39 years old – 16.74 percent

40 – 49 years old – 20.70 percent

50 – 59 years old – 24.42 percent

60 – 69 years old – 20.23 percent

Over 70 year old – 10.93 percent

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