Driving a Cadillac Escalade may be the only way shoppers on the East Coast could go out and buy a new car at the end of the month.
Monthly new car sales could take a hit from the fierce storm sweeping across the Northeast right now. The final weekend of the month is typically one of the best for car dealers, but big storms have a way of keeping potential buyers at home.
With what could be the highest reported January since 2006, sales are expected to increase 12.9% year-over-year. However, this could be impacted by the blizzard currently blasting parts of the East Coast, as we head into the final selling days of the month, according to analysts at Kelley Blue Book.
Alec Gutierrez, senior analyst for Kelley Blue Book, noted January is typically one of the slowest months of the year, due to the strong push by manufacturers prior to year-end. However, at an estimated 1.14 million units expected in January, this month could be the one of the better Januarys in some time.
“Sales are trending well above levels since this time last year, when the polar vortex kept shoppers away from dealerships in many parts of the country,” he said.
“Although sales have moved briskly so far in January, a potential blizzard on the East Coast does present downside risk as we head into the final selling days of the month.”
Total sales in 2015 are projected to hit 16.9 million units overall, a 2.5% year-over-year increase and the highest overall total since 2005, when sales fell just short of 17 million units, Gutierrez said.
General Motors, Ford, FCA U.S., Toyota and Honda are all projected to post double-digit sales increases for January.
“Full-size trucks continue to thrive in 2015 and Kelley Blue Book anticipates sales will improve more than 10% in January alone,” said Gutierrez. “Expect a strong push from Chevrolet Silverado, GMC Sierra, Ram and F-Series, especially when taking into consideration the low cost of fuel and the appeal of these recently redesigned core products.”
Growth in the small crossover segment should begin to slow, but it will remain in the double-digit range in 2015. In January, Kelley Blue Book expects sales to improve by nearly 10% on strong demand for the Jeep Cherokee, Honda CR-V, Toyota RAV4 and a host of other strong competitors in the segment.
Eric Lyman, vice president of industry insights for TrueCar, said, “2014 was a year of recovery and growth for the auto industry, and that trajectory continues into 2015 as TrueCar expects new vehicle sales will reach 17 million units,” Lyman said. “Even more compelling is our projected revenue growth of 4.8%, which is the result of increasing sales volume and rising average transaction prices.”
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Incentive spending by automakers averaged $2,642 per vehicle in January, up 3.6% over a year ago and down 10.4% from December 2014.
“With solid economic expansion under way and consumer-friendly gasoline prices, the auto industry remains a high-growth sector,” said Lyman. “Other indicators signaling a home-run year for the industry include the recent high in U.S. single-family housing starts and pre-recession unemployment levels.”
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John Humphrey, J.D. Power & Associates Senior vice president, also mentioned that with the continuation of low gas prices, consumers are purchasing more trucks. So far in January, trucks, vans and SUVs account for 55.4% of sales, the highest level for a January since 2004.
“The auto industry is starting 2015 on auto pilot with January tracking as expected after a vigorous December,” said Jeff Schuster, head of forecasting at LMC Automotive. “Growth of 3% should be easy to achieve as the risk could be centered more with automakers and suppliers not being able to keep up with demand if growth were to be stronger than we project.”
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Vehicle production in North America ended 2014 at 16.9 million units, a 5% increase from 2013. Significantly outpacing the annual increase, production in December was at 1.2 million units, 16% stronger than December 2013.
Schuster added given the strong pace of sales in December, however, inventory levels dropped to a 61-day supply at the beginning of 2015 from 71 days at the beginning of December.