JD Power is now forecasting that the total US light vehicle market will drop to 13.6m units in 2008, 16% under last year’s 16.1m total. A further drop to 13.2m units is projected for 2009. The forecaster and market analyst also said that Europe’s market is set to decline while growth in China and India is slowing.
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As the US new vehicle retail market continues to deteriorate, new vehicle retail sales (excluding fleet sales) are projected to end 2008 at 10.8m units, which is 2m units below 2007 sales, according to JD Power.
JD Power says that approximately two-thirds of the decline in retail sales — which are reflective of actual consumer behavior in the new-vehicle marketplace — can be attributed to consumers delaying vehicle purchases.
On average, consumers are keeping their vehicles four months longer in 2008 compared with 2007 — up from 67 months to 71 months. The remaining one-third of the volume decline comes from reduced leasing activity. Additionally, fleet sales are expected to decline to 2.8 million units in 2008, which is well below the 3.3 million unit level achieved in 2007.
“Buyers are both voluntarily and involuntarily exiting the US new vehicle market,” said Jeff Schuster, executive director of automotive forecasting for JD Power and Associates. “The additional decline in expected vehicle sales is a function of growing concerns around availability of credit and leasing, declines in vehicle equity and general economic stress.”
The current turmoil and financial crisis adds risk to the 2008 forecast of up to 200,000 units, as it is unclear how consumers will respond in the fourth quarter.
Market uncertainty has also led to a downward revision of the 2009 US light vehicle forecast. Total new light-vehicle sales are expected to drop to 13.2m units in 2009, with the retail sales market declining to 10.6m units.
“Falling trade-in equity, fewer leasing options, credit market restructuring and the increased migration to used vehicles are all putting added pressure on the U.S. new vehicle sales market in 2009,” said Schuster. “Any truly pronounced recovery appears to be more than 18 months away.”
China and India slow
Slowing within China’s automotive market is projected to intensify during the fourth quarter of 2008, and will likely lead to a downward revision for 2009. Despite the slowing, light vehicle sales — including passenger vehicle and light commercial vehicle segments — in China are expected to reach 8.9m units in 2008, which marks an increase of 9.7% from 2007. However, the projected growth rate for the China automotive market in 2008 is less than one-half of the 24.1% growth achieved in 2007.
The light-vehicle sales forecast has also been reduced for the India market, down 6% from the original forecast of 1.9m units to 1.8m units for 2008. The 5.1% growth rate forecasted for 2008 is considerably less than the increases seen in 2007 (16%) and 2006 (21%).
Europe to fall
Light vehicle sales in Europe are expected to fall to 21.3m units in 2008, marking a 3.1% decline from sales in 2007. Within Western Europe, sales are forecasted to decline to 15.6m — a decrease of 7.5% from 2007. While sales in Eastern Europe are expected to increase to 5.8m in 2008 — up 11.3% from 2007, growth within the region is slowing considerably.
“While the global automotive industry is clearly experiencing a slowdown in 2008, the global market in 2009 may experience an outright collapse,” said Schuster. “While mature markets are being impacted more severely than emerging markets, no country or region is completely immune to the turmoil.”
