AlixPartners: 2014 May Be The Peak Of U.S. Auto Sales
The good news? Automakers are enjoying a sales boom in the United States the likes of which haven’t been seen since the Great Recession brought the hammer down, with June 2014 sales alone surpassing those in July of 2006. Should the boom continue, 2014 will close as the industry’s best year in a long time, with over 16 million vehicles sold when the calendar ticks over to 2015.
The bad news? This year may be the last year U.S. sales ever climb this high.
Autoblog reports a study by AlixPartners suggests sales will peak later this year, then head back down the mountain on the beaten path of rising interest rates — diminishing purchasing power in the process — then veer toward the long trail built upon the Millennials’ alleged preference of Uber and Car2Go over individual ownership.
In the near-term, director Dan Hearsch warns the lines of cheap credit today will dry up over the next two to three years:
The biggest factor would be this credit bubble, and without making an exact projection of when that will happen, that, to use is the window when you’ll see an impact on car sales. The other side of it is cyclical and predictable. … We’re a little more pessimistic because of these other factors.
Further up the path, rising fuel prices will temporarily give hybrids and EVs a boost in sales, but improvements in the ICE and the ongoing issues with EVs — range, higher upfront costs and production of battery packs — will mitigate whatever gains are made unless the technology comes into parity with the ICE.
Finally, AlixPartners expects 80 percent of all vehicles sold in North America by 2017 will be connected vehicles, and advises governments and OEMs to prepare for the day autonomous vehicles take their first outings beyond Google’s research facility, as such vehicles will be key to future sales.
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- Bkojote I think it's a home run that VW is bound to bungle.For the anti-CUV crowd there's a cool factor here as pickup trucks have become so cartoonish. This will absolutely embarrass the neighbor with a GMC pavement princess pile in the driveway. Even better, the VW van fandom hasn't ruined these the same way it has the Sprinter, and honestly the design looks tight. And believe it or not there's huge demands for minivans- look no further than the unobtanium that is the Toyota Sienna.So here's what's going to go wrong-These are going to be priced on the premium end and they'll be hype for the first 3 years. The owners (whom The MKIV coil packs and dieselgate disasters a distant memory) trading in their post-college Rav4's and CR-V's are going to quickly discover the whole host of Volkswagen failures- bad sensors, glitchy software, leaking roofs, and hell it'll probably have an emissions scandal of its own somehow. This on top of the already terrible haptic controls VW has, the unreliable charging network, and terrible range. And they'll have the privilege of endlessly fighting with Sleazy Sam's VW dealership after the 4th flat bed tow.They're gonna make the same mistake the kids did in the 80's with the rabbit, the 90's with the Passat and Jetta, and the 00-10's with the TDI's- think VW finally turned the corner and stopped making garbage before doing the trade of shame back to Toyota and Honda.
- Buickman the only fire should be in the board room.they just hired an executive from Whirlpool.that should help them go do the drain.
- Mike Beranek I don't care about the vehicles. But I'd be on board for inspecting the drivers.
- Art Vandelay Coming to a rental lot near you. And when it does know there is a good chance EBFlex and Tassos have puffed each other's peters in it!
- Art Vandelay I doubt there is even room for EBFlex and Tassos to puff each other's peters in that POS
Rising interest rates alone won't do it. I will be surprised if they ever move much past 2% on captive financing from manufacturers on new cars. I do expect used car values to drop dramatically when interest rates increase since the costs of the loans will shoot up, but only after supply and demand have reached some kind of equilibrium in the used market (this seems to be a long way off). Manufacturers can easily play a shell game with production efficiency increases/automation and invoice prices. If you look closely, you'll see that they're already playing this game. The bigger headwind is that we are about to run out of Baby Boomers that are in their peak spending years. Once this happens, the economy is going to collapse again (it never really recovered, it just appeared to as older boomers pushed money into the market chasing returns for their retirements). Not trying to be a chicken little, but the future looks bleak.
Why all the panic? Just because some guy who annoyed himself an expert says so? Yes millenials drive less for now.......they all can't live in a coastal city with super mass transit infrastructure. Some have to live in the fly over states that are just too big, too spread out etc. Some day.......they will get a life, move out of mom and dad's basement, get married, have kids and need to go to the grocery twice a week and buy stuff like food and shampoo and toilet paper (the later of which they will learn does not actually grow on the roll and has to be purchased). When these events start happening they will need transportation, aka a car. We still have a lot of 8 year old or older cars on the road in the U,S. Despite the best efforts of even the most frugal and mechanically savy here on this blog, these cars will ultimately succumb to rust, age, accidents, etc that will render them no longer useful. Everything reaches a point of diminishing returns, cars, widgets, human life....nothing lasts forever. Yes rates will go up, yes the general public will have to reevaluate and perhaps purchase a Corrola instead of a Camry. But, purchase a car they will. God bless, enough with the he spent the dough garbage. THEY all spent the dough republican or democrat. WE elected them democrat or republican, we as a society did this. It is a fools errand to think that if MY guy or MY gal was elected we would not be in this mess, we would. They all cater to their group and all the groups want one thing, more money.