The U.S. auto industry will party like it’s 2005 next year, according to the annual forecast released by Kelley Blue Book (KBB), a key industry source for research and projections. KBB also sees the early returns for December 2014 in milestone mode, with U.S. sales expected to hit numbers not seen since 2006. Industry forecasters agree that 2015 will be even stronger if the current conditions stand.
Best sales in a decade?
Kelley Blue Book estimates sales in 2014 will veer toward 16.47 million, which would be an increase of nearly 6% over 2013 and the best year for the industry in eight years. U.S. sales hit 16.5 million vehicles in 2006, a total that prompted Bloomberg to call the year “Detroit’s annus horribilis.” Oh, how times have changed.
Hitting that pre-recession marker is a milestone that will be celebrated from Detroit all the way to Turin and beyond. Fiat-Chrysler is projected to post a 1.2% year-over-year gain in U.S. market share in December while posting overall sales gains near 16% in 2014. That’s quite a performance for the former Chrysler Group and its Italian parent, with the strongest showings coming in the Jeep and Ram divisions. U.S. full-size truck sales are on their way to breaking 2 million in sales for the first time since 2007.
Out in Toyota City, Japan, executives of the industry’s top seller will be toasting another big year on U.S. soil, proving efficient passenger cars have their market among Americans when done right (i.e., affordable and reliable). Volkswagen Group is projected to join Toyota and Fiat-Chrysler as the only three major automakers to boost market share in December 2014, according to Kelley Blue Book.
Other industry projections put KBB estimates as slightly conservative for 2015.
The road to 17 million sales
There have only been two instances in which U.S. auto sales have hit 17 million (including the all-time high of 17.4 million in 2000), but AutoNation CEO Michael Jackson says such a thriller is possible in 2015. If so, profits would likely hit their highest level in the industry’s history.
The auto industry has always been a key driver of the U.S. economy for a variety of reasons, and one of them is psychological. When people feel like their economic outlook is merry and bright, buying a car is one of the most popular ways to celebrate. After all, it is far more likely friends and acquaintances will find you in your car as opposed to your home, and financing and trading in an old vehicle has become so simple.
Meanwhile, the quality of automakers’ offerings continues to improve, tempting Americans to follow through on what one industry executive described as a feeling of “economic bliss.” Jeff Schuster, senior VP of forecasting at LMC Automotive, sees the continued job creation and low gas prices as crutches for the industry to stand on as it approaches 17 million sales in 2015.
The best December since 2006 looks as if it will precede the best year in a decade. With gas prices maintaining their incredibly low prices at the start of 2015, there is no telling how high the auto industry might go.