Strong Sales for Cars and Light Trucks Forecasted

by : Anthony Fontanelle

At the annual Convention and Exposition in Las Vegas, good news was shared to the car manufacturing industry by the chief economist of the National Automobile Dealers Association or NADA. Paul Taylor, who is renowned for his insightful analysis of automotive sales and the economic trends in the US, has forecasted that this year, 2007, sales of cars and light trucks will equal that of last year. He cited that the reason for the projected sales output in the year 2007 is the arrival of many high-quality fuel efficient vehicles.

Taylor said that signs in the economy and the market shows that this year will see a solid year in the sale of cars and light trucks. He added that any significant increase in the roughly estimated 16.5 million units to be sold will be hampered by steady interest rates as well as the continued slowing of home mortgage refinancing. But the two factors will definitely not stop the steady pace of vehicle sales unlike the brake parts that can easily stop a moving vehicle.

The chief economist reported on the trends that governed the car and light truck sales last year. He said that light trucks comprise the biggest percentage of light vehicles used last year at 53 percent. Sedans also increased in sales but not enough to be the majority in the total sales of light vehicles in 2006. Another segment that exhibited continuous growth in the market share is the crossover utility vehicle (CUV) segment. CUV sales have increased by 9.1 percent over 2005 sales figures and Taylor has forecasted that the growth of the segment will continue and he even is brave enough to state that he is predicting an 8 percent increase in 2007.

Sedans, which have seen steadily growing demand, has increased their sales by 1.8 percent for the full-size sedans while for the small cars, the increase is 4.7 percent. New designs and better mileage of the cars played a major role to the increase in the demand of the public for them. This is apparent in the newer models which have radically changed their appearance to increase their aesthetic value.

A prime example of this is the cars from Volvo which has departed from their reputation of having a boxy design. The effort by car manufacturers to produce good looking cars is aimed to attract the attention of younger car buyers. The younger generation is the target now of different car makers hoping that they will create a loyal buyer base that would later see them being long term consumers.

Taylor further predicted that used car sales by franchised new car dealerships will best last year's figures. "Used vehicles sales will receive increased attention by new car dealerships," the economist quipped. He added that "dealers will look for ways to increase used-car sales, and at least 100,000 additional light vehicles are likely to sell at franchised new-car dealerships this year". Taylor also stated that "used-car sales and parts and service revenue will be an important focus for dealers this year".

Other factors that allows the chief economist to predict the steady pace of automobile sales for this year is the low employment numbers which average 4.6 to 4.8 percent in 2007. He also cited the number of people per month returning to work which rose up to 130,000 will be generating many used car costumers and a small number of new car customers.

Taylor spoke for the National Automobile Dealers Association which has been founded in 1917 and is based in McLean, VA. The association represents more or less 20,000 new car and truck dealers which has a combined number of franchises of 43,000 globally.