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J.D. Power: New-Car Sales Reaching Record Levels

November 19, 2014

LOS ANGELES — J.D. Power’s John Humphrey gave the U.S. auto industry a clean bill of health this week at the NADA/J.D. Power Western Automotive Conference at The LA Downtown Hotel.

New-vehicle sales in the U.S. are steadily approaching the record of 17.3 million set in 2000, but are doing so with more discipline in pricing and the use of incentives, according to Humphrey, senior vice president of the global automotive practice at J.D. Power.

“The industry is in a very healthy state,” Humphrey told the audience from more than 250 automotive industry representatives. “[Sale] growth has continued to be impressive with this year up roughly 6%. We are approaching the record, which was arguably somewhat artificially inflated given less industry discipline and heavy reliance of subvention to move product back then.”

J.D. Power and LMC Automotive are projecting retail new vehicles sales to reach 13.6 million in 2014 with total new-vehicle sales to hit 16.4 million. The sales growth in 2015 is projected to be more moderate at 2% growth to 13.8 million retail sales and 16.7 million total sales.

Humphrey noted that average retail transaction price is $30,026 in 2014, up from $29,298 in 2013, and overall consumer expenditures on light vehicles are expected to reach a record $407 billion in 2014. 

Despite the positive outlook for the auto industry, Humphrey cautions that there is some risk in the market.

“The first major issue to watch is the impact the inevitable increase in interest rates will do to demand,” Humphrey said. “We have enjoyed a prolonged period of very cheap money that is coming to an end, and this will clearly affect demand.”

Humphrey anticipates an aggregated rise of 100 basis points would likely increase demand by 300,000 units.  

 

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