Dealer Group Predicts Steady 2007

Dealer Group Predicts Steady 2007

By Michelle Krebs May 17, 2007

Paul Taylor, chief economist for the National Automobile Dealers Association, forecasts that light-vehicle sales will hold steady at nearly 16.5 million units in 2007, with sedans and crossovers leading due to rising gasoline prices.

"Customer incentives appear to be rising along with the stock market, and that should help sales in the second half of 2007,” Taylor said in a press release from the dealer trade group. “Interest rates will remain stable, and that will help sustain light-vehicle sales. But higher gasoline prices will change the mix of vehicle selling, which will be led by sedans and CUVs once again."

In addition to higher gas prices, Taylor says strong car and CUV sales also are the result of many attractive new products on the market.

Taylor’s forecast comes as the dealer association released the NADA DATA, a comprehensive annual analysis of the industry for 2006. The report, available in the May issue of NADA’s AutoExec magazine and online at www.nada.org, shows the nation’s new vehicle dealers recorded their eighth strongest year on record in 2006. They sold more than 16.5 million vehicles, down from 16.9 million in 2005.

Light trucks outsold cars in 2006 for the sixth consecutive year, 8.7 million to 7.8.million respectively, but the gap closed somewhat. Light trucks made up 53 percent of total new-vehicle sales in 2006, down from 55 percent in 2005.

Crossovers, small cars and large domestic sedans led the gains in sales last year, growing by 9.1 percent, 4.7 percent and 1.8 percent, respectively.  In contrast, pickup trucks fell 10.6 percent and SUVs dropped 11.7 percent for the year.

In 2006, vehicle sales continued to be driven by generous incentives, such as cash rebates, competitive pricing and attractive financing and lease options, as well as U.S. employment gains. However, higher energy prices, resulting from escalating tensions in oil-producing regions, caused consumer concern that somewhat tempered the sales pace. 

Additional highlights from NADA DATA include:
•The average retail selling price of a new vehicle increased to $28,451 in
2006, from $28,381 in 2005;
•the average used-vehicle transaction price at dealerships rose to $15,518,
from $14,923;
•the average dealership annual payroll was $2.5 million in 2006, up from 2.4
million in 2005;
•the total industry payroll was $52.9 billion, up more than $1 billion in a
year's period, representing nearly 14 percent of the nation's total retail trade
payroll;
•the number of franchised new-vehicle dealerships in the U.S. dropped by
295, to a total of 21,200, reflecting an ongoing moderate consolidation
trend. 

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.