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January 11, 2016

Detroit – US market to grow further in 2016

After 2015's record-breaking US light vehicle market of 17.4m units, analysts expect the vibrant US market to post a further record in 2016 in spite of the forecast upward movement to US interest rates.

After 2015’s record-breaking US light vehicle market of 17.4m units, analysts expect the vibrant US market to post a further record in 2016 in spite of the forecast upward movement to US interest rates.

LMC Automotive analyst Jeff Schuster told just-auto that the US market has been driven up by the age of the parc, a positive consumer finance environment, the growing economy and low oil prices. “The economy will be a favourable factor in 2016,” he said. “We are looking at interest rates rising by 25 basis points and then another similar rise later in the year. The Fed is taking a cautious approach. The direct impact on consumers managing monthly repayments is pretty minimal.”

LMC expects the US light vehicle market to hit 17.8m units in 2016. “The economy should grow at a faster pace than in 2015 and we’re pretty confident the market will post another record year in 2016, but with a moderating growth rate, given where we are.”

Schuster believes that Volkswagen’s difficulties in the US provide an opportunity for other OEMs to gain share.

“Volkswagen faces a tough year in the US. The solution still needs to be rolled out and consumers need to digest it. Until we get to that point and see how consumers will respond, it’s going to be a tricky year for them,” he says.

“When you look at VW’s market position, the major volume brands look like the ones who can make gains. So that would be the Detroit Three, certainly, plus Toyota, Nissan, Honda, Hyundai. Depending on what models we are talking about, a brand like Subaru could gain too, if they have enough capacity.”

Schuster thinks that the Detroit Show this week will pick up where CES in Las Vegas left off. “We’ll be hearing more about self-drive and autonomous technologies and connected vehicle features. There will likely be some surprises in those areas. GM has a lot to prove, there’s a new Buick. GM has a lot of new product and they will likely have a good show. And we’ll generally see more focus on premium this year.

“If we look back at 2015, I think the New York Show trumped Detroit as a show that has product and excitement and I think Detroit is trying to get that back.”

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