CIT Forecasts Light Vehicle Sales To Level Off Record Sales Levels Expected in 2000 and 2001
20 January 2000
LIVINGSTON, N.J.--Although a healthy economy and popularity of sport utility vehicles have driven light car and truck sales, sales during the next two years will flatten and possibly decline slightly, according to The CIT Group's 2nd Annual Light Vehicle Outlook.
The forecast, which was published this month, predicts that domestic light vehicle sales will reach 16.7 million units in 2000, followed by a minor dip to 16.5 million units in 2001 - according to CIT, this represents the second and third highest sales levels on record just behind last year's estimated all-time high of 16.8 million units. The forecast predicts that in 2000 and 2001, truck sales will reach 8.07 million units and 8.05 million respectively - a small decrease from 1999's record of 8.08 million units - while car sales are expected to decrease to 8.5 million units by 2001, representing a 2.3 percent decline from 1999's high of 8.7 million units.
"The decrease in car sales accounts for almost the entire decline in light vehicle sales, and I seriously doubt that they'll ever eclipse the record set in 1986," said Michael Paslawskyj, vice president of economic research at The CIT Group. "There's been a fundamental shift in demand that results in the mass appeal of sport utility vehicles regardless of the fact that most SUV buyers will never see snow or go off-roading. It's an amazing phenomenon."
Baby Boomers Drive Trend
According to the Outlook, an influential factor driving light vehicle sales is baby boomers - the population segment with the highest median household income in the nation - resulting in a permanent increase in industry sales. "We believe that in the future, the trend in light vehicle sales will average 16.2 million units annually," said Paslawskyj. "That's a fairly significant increase compared to the 15.2 million unit average of just a few years ago."
Paslawskyj adds that an influx of cash driven by rising stock market and home values is driving the trend toward purchases of upscale autos and luxury goods especially within the baby boomer segment. "Boomers are also the reason leasing has become so popular," he said. "Leasing accounts for thirty-two percent of all new vehicles and is a major contributor to rising vehicle sales."
Imports & the Internet
The Outlook predicts that light vehicle imports will continue to rise, with sales expected to reach 2.5 million units in 2000 and 2.6 million units in 2001. As a result, imported light vehicles will account for 15.7 percent of total U.S. sales in 2001 versus 14.7 percent in 1999. Paslawskyj attributes the rise to a strong dollar and the popularity of luxury vehicles, which are primarily manufactured overseas. "Compared to the U.S. market share that imports commanded in the 80s, I'd say we're currently in pretty good shape," he commented.
The forecast also suggests that the Internet will grow as an important research and purchasing tool in the car buying process, although consumers will continue to visit showrooms to test-drive vehicles. "Not only will the Internet allow consumers to buy customized cars that will be delivered in weeks as opposed to months, it will also contribute to lower prices," said Paslawskyj.
With $50 billion in managed assets, The CIT Group, Inc. is one of the nation's largest commercial and consumer finance organizations. The CIT Group/Equipment Financing is a leading provider of loans and leases to the automotive industry and The CIT Group/Business Credit is a leading provider of financing to small and medium-sized companies.