Pub. 11 2012-2013 Issue 4

N e w J e r s e y C o a l i t i o n O f A u t o m o t i v e R e t a i l e r s w i n t e r 2 0 1 3 20 new jersey auto retailer T hese smaller gains have led some to speculate that the sales recovery is running out of steam. This is NOT the case. In fact, the recovery still has plenty of legs, with sales likely to trend higher for at least the next two or three years. What are the reasons for the optimistic outlook? Below is a report card, created by AutoOutlook, that details the primary factors that drive the market. Accompanying each is a grade, reflecting how the economic or auto market indicator is likely to impact sales. An “A” means that the indicator is pointing to an increase in sales, while an “F” means that the direction of sales should be negative. Economic Growth. Grade: B-. Following the 2008/2009 recession, the economy has grown, but at a very slow rate. This is especially true in the Garden State, where State GDP declined in 2011. Most economists expect this slow growth scenario to continue for the foreseeable future. Labor Market. Grade: C. The State unemployment rate in December 2012 was 9.3%, which is well above the low of 3.9% in October 2006. In ad- dition, approximately 15,000 fewer New Jersey residents were employed at the end of 2012, compared to 2006. Sluggish job growth is the main dragging force holding back the rate of growth in new vehicle sales. Consumer Confidence. Grade: C. The University of Michigan Consumer Sentiment Index was 73.8 in January 2013, only slightly above levels at the depth of the recession. Thankfully, there are several compelling reasons prompting many consum- ers to purchase new vehicles that offset this lack of confidence in economic conditions. Consumer Affordability. Grade: A. Relative to in- come levels, new vehicles are about as affordable as they have ever been. Low interest rates, respectable (if not exceptional) growth in personal income, and the competitive new vehicle market (result- ing in attractive incentives) are combining to make a new vehicle purchase a viable option for many consumers. Household Debt. Grade: B-. Debt levels are still elevated and the de-leveraging process still has a way to go, but households have made considerable progress in getting out from under the debt load accumulated during the past decade. Pent-Up Demand. Grade: A-. By now, anyone even remotely familiar with the auto industry knows the definition of pent-up demand. Postponed purchases during the recession, and a corresponding aging of vehicles on the road will give an extended boost to sales for quite some time. New Jersey New Vehicle Market Should Remain on Upward Track By Jeff Foltz After increasing sharply in 2010, the pace of recovery in the New Jersey new light vehicle market has slowed down over the past two years. According to statistics compiled by Experian Automotive, new retail light vehicle registrations in the State increased 13% from 2009 to 2010, and then posted identical 5.1% increases in the past two years.