Pricewaterhouse: Auto sales unlikely to keep rising every year
A PricewaterhouseCoopers (PwC) analysis looks at the case for and against auto sales rising every year and concludes that a decline is likely in future years, and the industry should be prepared.
The case for a continued annual increase in sales: It could logically be argued that with sales just finally recovering in 2014 that we could be poised for further additional growth in the coming years, due to the overall severity of the last recession. With the four-year decline in auto sales the longest since 1982, the recovery could be correspondingly long, perhaps five to six years.
On the other hand, no one knows yet the long-term effect of baby boomers retiring in large numbers and whether millennials will take their place as major drivers of auto sales. On a more immediate note, the Fed has indicated it could raise interest rates in 2015, which could dampen auto sales. Now that the used car supply has increased, used car prices and leasing residuals will likely fall (see preceding story). Those factors could make it harder for consumers to lease new cars, and leasing is now at a record 30 percent of new-vehicle financing.
PwCês conclusion: The prospects of the U.S. continuing to grow on infinitely are unlikely and a decline in U.S. sales will likely happen in the coming years. PwC analysts do expect higher sales in 2015.Download Bulletin PDF