AutoPacific forecasts three more years of growth for light vehicle sales

(February 19, 2015) TUSTIN, Calif. — AutoPacific today announced its forecast for 2015 U.S. light vehicle sales. Predicting a 547,000 unit increase over 2014, AutoPacific forecasts a 2015 year-end total just shy of 17 million units. If sales reach the forecast, it will mark the highest sales year since 2006.

"U.S. sales recovery has been steady since hitting the bottom of the decline in 2009, though recent years have seen things taper off from 11% growth in 2010 to 6% in 2014, and a forecasted 3% growth this year," says Ed Kim, vice president of Industry Analysis at AutoPacific.

AutoPacific forecasts continued nominal increases in U.S. light vehicle sales, reaching a peak at just over 17 million units in 2017. "Growth over the next few years is fueled by continued increases in truck and SUV sales, but the big story is in the compact crossover SUV segment, which is seeing significant growth for both mainstream and premium brand nameplates," explains Kim. AutoPacific's 2015 forecast predicts a market share split of 55% truck / 45% car: the largest truck share to date.

Despite current and near term growth, AutoPacific forecasts a drop in sales volumes later in the decade. Why the decrease? According to Kim, a likely rise in interest rates in the coming years, along with Millennials waiting longer to buy their first new car are just two reasons for a future sales decline. Additionally, the average loan term will affect future sales.

"Consumers today are enjoying low interest rates and great monthly payments," says Kim, "but they are financing their loans over a much longer length of time than they were a few years ago." Today, the average loan length is 66 months, compared to the 48-month average of a few years ago. "Vehicle buyers will be in a negative equity position on their loans a lot longer than in the past, and that will have a profound impact on replacement demand in the future."

AutoPacific's first quarter forecast for year-end sales has proven to be exceptionally accurate over the years. With forecast accuracy of 97.7% in 2014, AutoPacific achieves a 10-year average accuracy of 95%. As researchers and analysts, AutoPacific's sales forecast methodology includes a review of economic factors as well as consumer data collected annually by AutoPacific to better understand vehicle buyer purchase intentions, including brand consideration and future segment intention.