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CIT'S Third Annual Light Vehicle Outlook Eclipses '99 Outlook; Light Truck Sales to Surpass Cars in 2001

5 January 2001

CIT'S Third Annual Light Vehicle Outlook Eclipses '99 Outlook; Light Truck Sales to Surpass Cars in 2001

    LIVINGSTON, N.J.--Jan. 5, 2001--The CIT 3rd Annual Light Vehicle Outlook, which includes cars and light trucks (pickups, SUV's and minivans) continues to be positive with sales in 2000 at a record 17.5 million units. This eclipses the previous record of 16.8 million units that was set in 1999.
    According to the Outlook, light truck sales will surpass cars in popularity during 2001 with 8.34 million units, with car sales at 8.28 million units. "For the most part, drivers, especially women, feel they will be safer in a truck, be it in bad weather or in a collision," commented Michael R. Paslawskyj, CIT Vice President - Economic Research. "America's continued fascination with light trucks appears to be firmly entrenched and not about to be reversed." The Outlook predicts that in 2002, truck sales will rise to a record of 8.83 million units while car sales will decline again to 8.20 million units.
    The Outlook predicts that both imported cars and trucks will do well going forward. In the current year, imported cars are expected to pull back slightly to 1.89 million units while imported light trucks should see a growth of 9.1 percent to 890,000 units. "Many of the imported trucks are `hot' models at the moment while many imported cars are in a more mature stage of their product cycle," said Mr. Paslawskyj.
    In 2002, the Outlook estimates that sales of imported cars will rise to 1.94 million units while imported light trucks are forecast to exceed 1 million units for the first time.
    In addition, the Outlook predicts that sales should experience some weakness if the long anticipated economic soft landing arrives. As a result, CIT sees a modest pullback in 2001 to 16.63 million units, although vehicle demand per household continues to rise slowly, and interest rates have peaked and are in a slow decline. These factors are working to offset the negatives from the soft landing and sales are expected to bounce back to over 17 million units in 2002, capping the four best years in the history of the industry.

    Light Vehicle Market Subject to Constant Risks

    The light vehicle marketplace is subject to numerous ongoing risks. First is the issue of the zero emission vehicle mandated by the California Air Resources Board (CARB). The schedule is to go into effect in 2003 and cars will be sold essentially at zero profit, which could spread to other states. Second is a proposal to raise the Corporate Average Fuel Economy (CAFE) standards for light trucks which are now exempt from the 20.7 mile per gallon standard that applies to cars. Lastly, there is the budding movement to establish national rollover ratings from the regulatory side. This will more than likely be implemented by regulators because it is an issue that the public identifies with, and the Outlook views it more as a model specific risk.
    The biggest risk, however, is the economy, and the Outlook assumes that a recession will be avoided in 2001 and 2002, but that there may be a "growth recession," meaning that real GDP will be expanding and unemployment will be rising. The Outlook predicts that this "growth recession" ends by year-end 2001 and better economic conditions return in 2002 and unit sales should move upward.

    About CIT

    With over $50 billion in managed assets, CIT is a leading diversified finance company offering vendor, equipment, commercial, factoring, consumer and structured financing capabilities. CIT operates extensively in the United States and Canada with strategic locations in Europe, Latin and South America, and the Pacific Rim. CIT has been in business since 1908 and is recognized as a leader in many of the markets it serves. For more information visit www.cit.com.

For a free copy of CIT's complete 2001 Light Vehicle Outlook, contact Kara DiCamillo of Stanton Crenshaw Communications, at (203) 359-8772 or via email at kdicamillo@stanton-crenshaw.com.