Pub. 15 2016-2017 Issue 3

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 17 new jersey auto retailer W W W . N J C A R . O R G 0 100,000 200,000 300,000 400,000 500,000 600,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Foreca st 2017 Foreca st Regs. 546,617 551,685 549,633 549,282 530,778 515,737 498,669 493,364 425,770 358,410 400,314 419,021 443,900 483,085 499,801 518,476 520,500 512,000 New retail light vehicle registrations Years New Jersey New Retail Light Vehicle Registrations - 2000 thru 2015, 2016 and 2017 Forecasts outstanding loans. The percentage fell to around 10% by 2014, and has remained stable during the past two years. Lower debt and higher disposable incomes are two key positives for new vehicle sales. • Pent up demand and benefits to “upgrade” should contin- ue to give the market a boost. The average age of vehicles on the road exceeds 11 years which, based on historical standards, is very high. Some have argued that due to improvements in quality and durability, this is to be expect- ed, and the time-line needed to replace vehicles is stretching out. But this only tells part of the story. Greatly improved fuel economy, performance, and information technology in today’s cars and trucks provide a powerful motivation for consumers to enter the new vehicle market. But it’s the introduction of advanced safety features (i.e. mitiga- tion braking, lane alert, smart cruise control, blind spot moni- toring, rear-view cameras, etc.) on mainstream, non-luxury brand vehicles that will give a boost to sales for many years to come. The average ten year-old, 2007 model year vehicle can’t even come close to a new, 2017 model. From a car owner’s standpoint, the motivation to upgrade is powerful. • A major it y of key economic i nd icator s poi nt to continued strength in new vehicle sales. The bevy of changes in regulatory, trade and tax policies (to name a few) that could occur as a result of the Presidential election, has added some uncertainty to the economic outlook. But as 2016 comes to a close, the majority of economic indi- cators collectively point to the continuation of a healthy new vehicle market. GDP growth is solid (if not spectacular) , unemployment rates are hovering around 5%, payrolls continue to expand, personal incomes are increasing, interest rates should remain at historically low levels, gas prices remain below $3 per gallon, and consumer confi- dence is strong. A major decline in new vehicle sales in an environment with such solid economic conditions is highly unlikely. In summa r y, t he new veh icle ma rket has f u l ly recov- ered from the sales slump that culminated in 2009. New vehicle registrations in New Jersey have returned to very strong levels, and exceeded 500,000 units in 2015 and 2016. It seems unlikely that the market will continue to march higher during the next several years, but it’s even less likely that sales will fall sharply. Almost all key market predictors are point- ing to continued strength in new vehicle sales for several more years. Jeff Foltz is President of Auto Outlook, Inc., an independent automotive market research firm. He can be reached at autooutlook@me.com . Historical data source: IHS Markit 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (est.) 2017 (est.) 546,617 551,685 549,633 549,282 530,778 515,737 498,669 493,364 425,770 358,410 400,314 419,021 443,900 483,085 499,801 518,476 520,500 512,000 gs. 0 , 00 00,000 , 0 400,000 500,000 600,000 New retail light vehicle registration New Jers y New Retail Vehicle Registrations - 2000 through 2015, 2016 and 2017 Forecasts