AlixPartners: 2014 May Be The Peak Of U.S. Auto Sales

Cameron Aubernon
by Cameron Aubernon

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.

Cameron Aubernon
Cameron Aubernon

Seattle-based writer, blogger, and photographer for many a publication. Born in Louisville. Raised in Kansas. Where I lay my head is home.

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  • EricJ EricJ on Jul 10, 2014

    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.

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    • SaulTigh SaulTigh on Jul 10, 2014

      Well, there are a lot of different boomers out there, as it is generally accepted that the boom ran from '46 to '64. My parents are from the '40's and have bought what they believe is their "last car," a 2014 Accord. There are still a lot of boomers out there with 10-20 years left to work. That being said, and anecdotally, it's been my experience that the boomers born in the late 50's have not been nearly as successful as those born right after the war. I know quite a few people in their mid to late 50's who are seriously struggling right now. Too young to retire, but to old and too unskilled in the modern workplace to find anything meaningful to do. The year of your birth can inform the cycle of your life in many ways. I was fortunate to be born at the bottom of the trough following the baby boom, and consequently, people of my year got plenty of attention and resources, and came of age before September 11th and the start of the economic issues. That's a pure accident on my part, but I'm grateful for the life I have.

  • 87 Morgan 87 Morgan on Jul 10, 2014

    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.

    • RogerB34 RogerB34 on Jul 10, 2014

      I purchased a 1967 Ford Galaxie 289 for $2k with 1800 miles 1969. It was sold in 1991 with over 125k miles. Think maybe I didn't want something better? Fix or Repair Daily. Depression lesson: Don't do consumer debt. Don't. No dipping into home equity either. No bling, clothes or vacations. Retirement rewards if any. Also paid 5 years each two daughters state college full ride, transportation, seed money on graduation. House free and clear at 65. $30k for a car on time? Clueless and that is a national problem,

  • GregLocock That's a bodge, not a solution. Your diff now has bits of broken off metal floating around in it.
  • The Oracle Well, we’re 3-4 years in with the Telluride and right around the time the long term durability issues start to really take hold. This is sad.
  • CoastieLenn No idea why, but nothing about a 4Runner excites me post-2004. To me, they're peak "try-hard", even above the Wrangler and Gladiator.
  • AZFelix A well earned anniversary.Can they also attend to the Mach-E?
  • Jalop1991 The intermediate shaft and right front driveshaft may not be fully engaged due to suspected improper assembly by the supplier. Over time, partial engagement can cause damage to the intermediate shaft splines. Damaged shaft splines may result in unintended vehicle movement while in Park if the parking brake is not engagedGee, my Chrysler van automatically engages the parking brake when we put it in Park. Do you mean to tell me that the idjits at Kia, and the idjit buyers, couldn't figure out wanting this in THEIR MOST EXPENSIVE VEHICLE????
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