GNYADA August 2016 Newsletter

6 Spring Car Sales Slow, but Outlook Remains Positive

peak is difficult to pinpoint. Some say that the market may presently be at that point. Sales were soft during the spring, particularly in May. Other factors contributing this projection are: The pent-up demand that accumulated during the downturn, when people were buying far fewer cars, has been released. When examining core market fundamentals (i.e., driving age population and household formation) there is a natural limit to how high sales can go. Although the unemployment rate has decreased to pre-recession levels, economists are still concerned about underemployment, accounting for individuals who would prefer to work but have given up seeking employment. n n

averages exceeding ten years old. Although cars are more reliable and last longer, the significant number of vehicles over ten years old likely need to be replaced soon. Features and equipment on today’s new vehicles incentivize consumers to upgrade. Buyers are now entering the market based on a desire to purchase a new vehicle, rather than a need. Advances in electronic safety features, performance, fuel economy, and infotainment have made even five- year-old cars seem outdated. External factors may alter the projected course of new vehicle sales in the future: the Chinese economy is slowing significantly, which could impact global economic growth; the outcome of the U.S. Presidential election in the fall; gas prices could finally drift higher. If and when we hit the projected sales

New vehicle sales in the metro area has been on a great run over the past six years. Registrations have increased each year since the 2009 sales downturn, reaching about 587,000 units last year in metro New York. Most industry analysts have indicated that the sales market is peaking, following this prolonged rebound. However, despite the plateau, several key factors are likely to keep car sales at very healthy levels for an extended period: Personal incomes and wages are increasing, interest rates are at very low levels, and manufacturer incentives are high. These factors affordable for most consumers, and this is not expected to change for the near future. The age of vehicles on the road remain at record highs, with have combined to make new vehicle purchases relatively

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This article was provided by Jeff Foltz of Auto Outlook.

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New York Metro Area Registrations

0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000

Metro area registrations are predicted to approach 610,000 units this year.

609,500

586,981

Registrations

553,884

531,573

501,070

450,850

449,172

452,076

432,032

384,763

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016 Forecast

Data Source: IHS Automotive

Greater New York Automobile Dealers Association • www.gnyada.com

The Newsletter • August 2016 5

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