Automakers to work harder for sales as US demand set to slow
Print Edition
Automakers are going to have to work a little harder for your business in 2014.
After four years of strong sales increases — and limited discounts — as the economy improved, US demand for new cars and trucks is expected to slow this year. That could mean better deals for buyers as car firms fight to increase their share of the market.
US sales rose 8 percent to 15.6 million in 2013, thanks largely to a surge in pickup truck sales from the home construction and energy industries. For the 32nd year in a row, the Ford F-Series pickup was the country's best-selling vehicle, with 763,402 sold. The Toyota Camry was the best-selling car with 404,484 sold.
But the industry got a taste of what’s to come when December sales slowed to a crawl. General Motors, Toyota and Volkswagen all saw sales decline as competitors offered better deals, according to TrueCar.com, which tracks car prices. Cold weather and strong sales tied to Black Friday in November also pinched December sales, automakers said. Overall industry sales were flat compared with December 2012.
A slowdown is inevitable, analysts say. Many people who held on to their cars through the recession have now bought new ones. Those who haven't may not be in any rush, because cars are lasting longer than ever before. And unless there's a strong uptick in employment, families aren't likely to buy an extra car.
Alec Gutierrez, senior analyst for Kelley Blue Book, expects US sales to increase by around 700,000 to 16.3 million in 2014. That compares to increases of more than 1 million each year since 2009, when US sales bottomed out at 10.4 million. US sales peaked at 17.3 million in 2000.
Gutierrez says sales are approaching a natural level of demand for a country with 210 million licensed drivers, especially since people are traveling fewer miles than they used to. Add to that increasingly competitive vehicles from all producers and you have a buyer's market, especially in popular and crowded segments like midsize cars.
“It’s not a forgone conclusion anymore that the Toyota Camry and Honda Accord will be the only players,” he said. “Automakers have invested so much to be so competitive and segment growth just isn’t there. They're going to have to get creative.”
Jeff Schuster, senior vice president of auto sales forecasting for LMC Automotive, an industry consulting firm, expects annual auto sales to grow in the 1 to 2 percent range through 2015, when sales will plateau.
“We are in what we believe are the final stages of the recovery, which naturally leads to slower growth rates,” he said.
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