NADA: NEW-CAR SALES WILL BE FLAT IN ‘05

NADA chief economist Paul Taylor

January 30, 2005—“Growth in the new-car sales market will move from 16.86 million in 2004 to only 16.9 million in 2005,” predicted NADA chief economist Paul Taylor, as part of a steadily upward trend spurred by increased vehicle choices and affluence, and “that should continue for the foreseeable future.”

But 2004 was a mixed bag, with crossovers showing 17 percent growth, large cars up 14 percent (in part because of the Chrysler 300 and Dodge Magnum), minivans and vans (business owners coming back to the market) up 4 percent, and pickup trucks (directly related to the Ford F-150 intro) up 3 percent. The biggest hidden story in 2004 was the recovery in minivans while the luxury market withdrew by 2.5 percent, Taylor said, adding that as equity markets return and consumer confidence grows, the sale of $40,000 to $65,000 luxury cars will rebound. Meanwhile, truck based SUVs’ downward trend is now in its fourth year.

On incentives, Taylor said it isn’t clear what the domestics will do in 2005. “They can't afford to take their foot off the throttle. It will be another competitive year.” A key concern for automakers: the dollar-to-euro and dollar-to-yen differences continue to affect product development and pricing