NADA Debunks Doom and Gloom Prediction

Today, Steven Szakaly, Chief Economist of NADA, and Mark Scarpelli, NADA Chairman, conducted a briefing based on the first six months of U.S. auto sales in 2017. They re-affirmed NADA’s positive prediction for 17.1MM in new vehicle sales in 2017 and 16.8MM next year. They pointed out that while sales are a bit softer than the previous two years, those years were back-to-back record years and the “softening” is still clearly within a favorable trendline.

NADA also ardently disagrees with the doom and gloom predictions that some are making. The briefing included the following points of emphasis:

• Positive employment growth and low unemployment levels are helping the economy continue to grow. History has shown that people with improved financial positions tend to prioritize vehicle buying in their spending.
• People clearly still value owning their own vehicle. Despite the hype in the marketplace, ride sharing and other alternative modes of transportation are having very negligible impact on vehicle sales.
• Despite the steep drop in demand for sedans, consumers have simply shifted to buying more SUVs and light duty trucks.
• It’s still a good time for consumers to shop for vehicles. Pricing remained flat in the second quarter. OEMs and dealerships are acting aggressively to capture their share of the SUV/light truck market. And buyers who still desire a sedan can take advantage of the tremendous incentives that are still being offered.
• Consumers will benefit from the tremendous mix of makes and models available to them. As Mark Scarpelli of NADA points out, “We know from empirical research that intra-brand competition lowers prices for consumers, and as a dealer, I can tell you that these competitive forces are present in abundance on the ground.”
• Loan financing has been extended to six years. Many consumers will find this extension attractive during the initial sales process, but they should understand that it will be pushing their net equity position into the fourth year instead of the third.

It should also be noted that last month, GM lowered its forecast for sales from 17.55MM to the low 17MM range for 2017, keeping in line with NADA’s forecast.

Given the state of the industry, dealer principals need to be asking themselves, “Am I positioned properly?” Expect competition to be fierce. Be prepared.

Do all your employees bring their A-game every day? Do you have the right mix of new and used vehicles on your lot? Are you properly staffed? Are your people properly trained? Assume that you will be operating in one of the most competitive stretches in consumer buying history.

Be proactive. Get ready. Beat the competition and boost your bottom line. Lean on your technology—especially your dealer management system—to save time and increase profits.