The US new-vehicle market continues to deteriorate, with new-vehicle retail sales projected to end 2008 at 10.8 million units, two million units below 2007 levels, according to forecasts from J.D. Power and Associates.
Vehicle sales also are expected to decline in Europe, while a slowdown in growth will intensify in China and India in response to the current financial crisis.
Approximately two-thirds of the US decline in retail sales can be attributed to consumers delaying vehicle purchases. On average, consumers are keeping their vehicles 4 months longer in 2008 compared with 2007 – up from 67 months to 71 months. The remaining one-third of the volume decline comes from reduced leasing activity.
“Buyers are both voluntarily and involuntarily exiting the US new-vehicle market,” said Jeff Schuster, executive director of automotive forecasting for J.D. Power and Associates. “Falling trade-in equity, fewer leasing options, credit market restructuring and the increased migration to used vehicles are all putting added pressure on the US new-vehicle sales market in 2009.”
Total US Light-Vehicle Market
Total new light-vehicle sales – both retail and fleet sales – are expected to drop to 13.6 million units in 2008, a 16% decline from 16.1 million units in 2007. Total new light-vehicle sales are expected to drop to 13.2 million units in 2009, with the retail sales market declining to 10.6 million units.
The current financial turmoil also adds risk to the US 2008 forecast of up to 200,000 units, as it is unclear how consumers will respond in the fourth quarter. Any meaningful, pronounced recovery appears to be more than 18 months away, J.D. Power said.
China Light-Vehicle Market
Slowing within China’s automotive market is projected to intensify during the fourth quarter of 2008, and will likely lead to a downward revision for 2009, J.D. Power said.
Despite this slowing, light-vehicle sales in China are expected to reach 8.9 million units in 2008, which marks an increase of 9.7% from 2007. However, the projected growth rate for the China automotive market in 2008 is less than one-half of the 24.1% growth achieved in 2007.
India Light-Vehicle Market
The light-vehicle sales forecast has also been reduced for India, down 6% from the original forecast of 1.9 million units, to 1.8 million units for 2008. The 5.1% growth rate forecast for 2008 is considerably less than the increases demonstrated in 2007 (16%) and 2006 (21%).
European Light-Vehicle Market
Light-vehicle sales in Europe are expected to fall to 21.3 million units in 2008, marking a 3.1% decline from sales in 2007. Within Western Europe, sales are forecast to decline to 15.6 million, down 7.5% from 2007. Sales in Eastern Europe are expected to increase to 5.8 million in 2008 – up 11.3% from 2007, growth within the region is slowing considerably.
“While the global automotive industry is clearly experiencing a slowdown in 2008, the global market in 2009 may experience an outright collapse,” said Schuster. “While mature markets are being impacted more severely than emerging markets, no country or region is completely immune to the turmoil.”
Light vehicles are defined as passenger cars, SUVs, MPVs and light commercial vehicles with gross vehicle weight of less than six tons.