In about two weeks, December 2015 US auto sales will be reported, and we’ll know whether the total tops the previous all-time high, set in 2000.
An impressive 17.4 million new cars and trucks rolled off dealer lots back then — 15 years ago.
But 2015 could better that milestone by over half a million vehicles.
The US market has been on a pace to hit 18 million since the summer, a peak it’s never achieved before. A strong December will get us there. And even a less-than-strong December will get us close.
Kelley Blue Book, the venerable consumer auto resource, is already calling the number.
“December has become one of the biggest sales months of the year, helped by year-end targets and prominent holiday sales events,” Tim Fleming, an analyst for KBB, said in a statement.
That the US market has recovered to this level, post-financial crisis, is astonishing and understandable. Annual sales dipped below 10 million during the dark days of 2009. But they have rebounded robustly, driven by an average vehicle age of 11 years — ancient by US standards — cheap gas, and easy credit.
The question now isn’t “Will 2015 be an epic year?” — it’s really all over but the counting — but “Will 2016 be even better?”
On that score, KBB thinks we might plateau at this level while the replacement of all those very old cars happens. For what it’s worth, a normal “replacement rate” market in the US delivers an annual sales pace of roughly 15 million.
“As we move into the new year, expect this strength to continue, although at a slower rate than this year,” Fleming noted. “In 2016, Kelley Blue Book forecasts sales in the range of 17.5 million to 18 million units, which would represent another record-breaking year.”
That’s good news for the big Detroit car maker in particular. Ford, GM, and Fiat Chrysler Automobiles are able to sell a lot of big trucks and SUVs when the market booms like this, and that means they’re also able to generate healthy profits.
That in turn helps them to bolster themselves against an inevitable downturn — the auto market is reliably cyclical — and to invest heavily now in developing new vehicles and technologies to remain competitive when the market bounces back.
As reported by Business Insider