NADA Chief Economist Raises Auto Sales Forecast

Taylor Also Says 2004 Sales Will Exceed This Yearês

With strong summer sales and an improving economy, NADAês chief economist, Paul Taylor, has raised his annual automobile sales projection from 16.3 million new vehicles early this year to 16.6 million just a tick below last yearês 16.8 million sales.

–A strong summer selling season, an improving economy, and completion of major combat operations in Iraq are favorable signs that auto sales are likely to finish the year somewhat higher than expected,” said Taylor. –Robust consumer incentives for 2004 models are also part of the brighter sales picture.”

Taylor noted that this year will mark the fifth straight year of sales above 16 million units –a remarkable accomplishment in a three-year period of economic and global uncertainty,” he said.

A key source of strength in the auto retail market is the –crossover” Sport Utility Vehicle, or CUV, which has led sales growth among all vehicles this year, up over 37 percent year to date, Taylor pointed out.

Sales of CUVs were up 78 percent in 2000, 87 percent in 2001, 23 percent in 2002, and will likely climb another 40 percent this year, according to Taylor.

Sales of traditional truck-based SUVs were up 1.3 percent in September over a year earlier, as many people continue to choose true, off-road vehicles with towing capacity. –Consumers are making a strong statement that they like their choice of an SUV, despite the many assaults on these vehicles by various special interest groups,” he said.

However, he added that CUV sales will likely overtake truck-based SUV purchases within the next five years, as many new and innovative CUV designs will be coming to market, sustaining overall light vehicle growth.

Taylor forecasts that 2004 sales will exceed this year’s projected 16.6 million total, if manufacturers continue to price vehicles for high-volume sales. Sales above 16.7 million units are likely for 2004, even with interest rates increasing over the next several years.

–Low prices for vehicles will result from continuing intense competition among automakers worldwide, as well as increasing retail competition and efficiency among the 20,000 franchised new car dealers in the U.S.,” he said. –Consumers will continue to benefit from these market forces and the product values that result.”