Low Gasoline Prices May Cause Shift to Light Trucks in 2015

Low gasoline prices and pent-up consumer demand will combine to drive new car and light truck sales to an estimated 16.94 million in 2015, says the National Automobile Dealers Association.

NADA’s original sales forecast of 16.4 million new cars and light trucks for 2014 was on target.

The split among the segments this year is, according to NADA, expected to be 44 percent cars and 56 percent light trucks and SUVs because of lower gasoline prices, increased job growth and an improving housing market.

“Consumers are more able to spend for extras because of declining gasoline prices and continued low interest rates,” NADA Chief Economist Steven Szakaly said today at a press briefing during the NADA Convention & Expo in San Francisco. “We expect to see significant growth in sales of light trucks, particularly in the large-size CUV and SUV segments,” he added. “At the end of the day, consumers like the utility and comfort that larger vehicles provide. Lower gasoline prices accelerate that shift.”

On the downside, small and midsized cars are likely to face a tougher market in 2015. Szakaly expects incentives to rise on small and midsize vehicles. In addition, hybrid sales are expected to be slower as long as oil remains cheap. Midsize cars are expected to decline in share of total light vehicle sales from 18.6 percent to 17 percent, while small cars are expected to lose 1 percent of share.

“The one area where prices and segment share are likely to remain stable is in the luxury segment,” he added. “A strong luxury brand, in any retail business, will hold extra goodwill that a consumer is willing to pay for.”

Category: Featured, General Update