Reuters Insider - 2015 car sales will hit record -KBB's Brauer
02/12/2015 05:00
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Description: Kelley Blue Book's Senior Analyst Karl Brauer
talks about the November auto sales and how auto
dealers amped up the Black Friday promotions.
Bobbi Rebell reports.
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Short Link: http://reut.rs/1LLStJf
Transcript (May be auto-generated)
Car dealers jumped on the Black Friday bandwagon last month and it looks like it
worked. November US auto sales looking very strong. Here with more, Karl Brauer.
He is Senior Analyst at Kelley Blue Book. Nice to see you. Hey, great to be on
with you, Bobbi. Alright. So were the deals actually better on Black Friday or
was there just more promotional talk about deals? I think it's the latter. I
think we saw a lot of messaging and a lot of heavy marketing push that had a lot
of people thinking this is a good time to buy. And it's not that the deals
weren't good this month, but I think the messaging was more powerful and more
kind of "in your face". So how are incentives compared to, say, a year ago? You
know, they're creeping up in certain areas. Some dealers and some manufacturers
are remaining disciplined, but others you know. We saw some pretty heavy
incentives on brands like Jeep that did extremely well last month, but it wasn't
without some help from incentives that helped them do that well. So what are
consumers looking for when they buy? And we keep hearing about SUVs.
Is this just going to be perpetual while we have the low gas prices? You know, I
think it's going to go beyond the gas prices. I think it really has already. We
saw them ramping up in the SUV and truck sales even before gas prices really
dropped over a year ago. And I think the SUVs now get really good mileage,
relatively speaking. You can get a lot of mid-sized and smaller SUVs that will
get 30-plus MPG. And when you combine that with the rest of what an SUV offers,
I think a lot of consumers are buying these vehicles now, and they're going to
keep buying them even if gas prices were to creep up. How's the financing
situation these days? Well that's the other thing, is you've got great financing
availability.
It's very cheap to get money right now and you can of course get longer loans.
We see a lot of people going for six- and seven- and now even eight-year loans,
which is a little crazy but it's working for people. And then there's also
leasing. And that helps you reduce your monthly payment. Either of those options
kind of helps you shield yourself from the cost of a new vehicle. How good, just
how good are car sales these days? I mean we're talking about maybe having the
best year since 2000? Yeah. We're having unprecedented numbers here, you know.
We're getting the Seasonally Adjusted Annual Rate of sales, the SAAR number.
That's above 18 million multiple times in a row. That's pretty unprecedented.
And it looks we're going to come in somewhere around 17.4 million sales, which
should be just barely beating the last record from the year 2000.
And to a large degree, a rising market lists everybody. But among the top
carmakers, who's kind of doing the best and who's maybe not doing as well? Well
you know, we still see great numbers coming out of smaller brands like Subaru
that just keeps growing and growing. They've passed formerly large brands like
Volkswagen. We know they've got some challenges going on right now. Toyota had a
great month last month. But again, there were some incentive activity going on
there. And then the domestics were really flatter, a little above flat. Some are
between 0 and 2% above last year's sales. The other thing to remember, Bobbi, is
that there were two less selling days in November. So in a peer like volume
number, to even be at, let alone slightly ahead of last November is impressive
given that there were less days to sell cars this year than there was last year.
So then how do we finish out 2015, and how does 2016 look? I think we're going
to finish 2015 strong. I think we are going to hit a record number, the highest
new vehicle sales we've ever seen before in this country. And I think in the
'16, even if there's some movement on the federal interest rates and I think the
pent-up demand and the low gas cost, I think all that's going to remain in
place. And '16 will probably be that much harder to grow. It's just hard to keep
growing like we have five years, six years in a row now. But I think it will
still hold relatively stable and still finish out above 17 million. We could hit
another record number possibly. Wow. Alright. Thank you so much, Karl. Great
being on with you. Kelley Blue Book's Karl Brauer. I'm Bobbi Rebell. This is
Reuters