January may have been a sign, and now some automotive experts are seemingly giving their confirmation: 2015 is going to be big for the automotive market. A potent combination of low fuel prices, a slew of new and refreshed models, and an improving economy are setting this year to be one of the biggest in terms of sales numbers in quite a long time. Though we are not even two months through 2015, the excitement is palatable.
To get into the specific numbers, car-buying and selling website TrueCar is expecting vehicle sales in February to spike with an 8.5% volume increase over February of 2014. In all, that would mean that dealers were able to sell off almost 1.3 million vehicles. While that’s an impressive increase in its own right, it’s nothing compared to what TrueCar is anticipating for the year as a whole. The company’s team says that as many as 16.7 million new car sales could accumulate over the course of the year.
“Strong February auto sales signal a very healthy U.S. economy,” said TrueCar’s Eric Lyman. “Given this month’s robust demand, the industry remains on track to hit TrueCar’s 17 million-unit projection for the 2015.”
While initial demand, created by a variety of market forces at work has been fueling the recent buying-spree in the car market, there has also been some serious attempts by automakers to get consumers out to dealer’s lots. Incentive spending, for example, is up over last month.
“Automakers should expect to post net revenue gains this month,” TrueCar’s Lyman added. “With overall restrained incentive spending, natural consumer demand is driving the increase in sales this month.”
TrueCar isn’t the only organization expecting big things in 2015. Kelley Blue Book (KBB), in its annual forecast, says that this year could be the biggest for the auto market in a decade. Both KBB and TrueCar land on the same expected number of new car sales, at 16.7 million, which would represent a 9.8% overall spike above 2014’s final count.
“While some vehicle sales may have been pulled forward during the start of holiday shopping in November, December sales remain strong with nearly double-digit growth expected for the industry,” said Alec Gutierrez, senior analyst for Kelley Blue Book upon the release of KBB’s forecast a couple of months ago. “December is typically one of the biggest months of the year for new-car sales, as many dealers and automakers try to surpass annual sales targets.”
Both KBB and TrueCar are being backed up by AutoNation, whose CEO Mike Jackson says that he wouldn’t be surprised to see total sales break the 17 million mark. “Anything that begins with a 17 has only happened twice before, I recognize that. But I think indeed, the market will break through 17 million,” he said during a conference call in late October per a Forbes report. Forbes also says that the record year for auto sales was in 2000, when 17.4 million new cars were sold, although that was spurred on by supplying large amounts of vehicles to rental fleets, and through deep discounting. In fact, Forbes goes on to say that despite lower production count and sales, today’s auto market is more lucrative than that of the early 2000s.
So, which companies are analysts expecting to come out on top? For February, TrueCar put together a fairly comprehensive set of projections, in which it estimates that Toyota will make the biggest move from a year ago at 17.6% growth. They are followed up by Subaru at 14.6%, and Honda at a 13.8% projected increase in sales. Again, the industry as a whole is expecting 8.5% growth in sales, so there really are no losers.
What is interesting though is that the three automakers expected to make the biggest jumps in sales — Toyota, Honda, and Subaru — are also the three that are likely to be the most adversely affected by the west coast port shutdown. Since those three companies are based in Japan, and rely heavily on port cities along the west coast to import vehicles and components, there could be some curveballs in coming months. For February, however, it’s likely that things will continue as normal, as parts shortages and slowed production probably won’t actually make for problems until a while after the situation has diffused.
As far as market share is concerned, there are some worrisome predictions for American companies. Fiat Chrysler, which held 13% of the market in February of 2014 is expected to see that portion drop to 12.5%. It’s predicted that General Motors will see an even bigger drop, from 18.6% to 17.6%. TrueCar thinks that Ford, on the other hand, will hold strong at 15.4%, representing no change.
That begs the question: Who is picking up ground if American companies are falling behind? Well, the biggest winner, if TrueCar’s projections hold true, would be Toyota, seeing its share increase from 13.3% to 14.7%. Honda’s market share would get a boost of 0.5%, and Subaru, although small relative to the others, would see a 0.6% increase.
These numbers are all preliminary, but given the fact that TrueCar seems to be backed up by plenty of other auto market analysis firms, we can probably expect February’s final sales numbers to be quite impressive. We do know that the port shutdown will have some sort of affect down the road, but we don’t know when, or by how much. That could change things as far as the year’s expectations go, and even shift some sales in the favor of domestic manufacturers, rather than Asian-based companies. Even so, 2015 is still looking very bright for the auto market.