Automotive Forecast

2009 will forever be remembered as an extremely turbulent year—filled with global automotive industry challenges. Global Light Vehicle sales for 2009 were approximately 61.9 million, down 5.1% from 2008. However, from a purely statistical point of view, the Global Automotive market demand seemed to be far more robust than expected at the beginning of 2009. November '09 sales were up 25% from the year before, and December '09 sales were up by about 22%! All together, fourth quarter sales were up about 17% over the final quarter of 2008, when sales bore the full brunt of the financial crisis.

Looking back we have to realize that demand was inflated by numerous government programs enacted to stimulate the automotive markets and as a result impact sales trends. On the other hand, it is astonishing how different the results were in most of the developed saturated automotive markets (e.g. the U.S.) compared to the upcoming "emerging markets" (e.g. China) which are still characterized by a very low density of vehicles on the road.

Stimulated by energetic government intervention, the global economy has stabilized in recent months so the basic economic outlook for 2010 is clearly better compared to the economic framework in 2009. Will the Global Automotive market follow this positive industry trend?

The latest Polk global light vehicle forecast report is available free for your download. This automotive forecast analyzes 2009 sales, Polk's economic outlook and light vehicle forecast for the year ahead. Take a look and let us know your expectations for 2010.

Global Light Vehicle Sales Forecast

Posted by Uwe Biastoch, Director Global Forecasting, Polk's Europe Operations (01.20.2010)

There has been much recent news and comment with respect to Europe and the sales environment looking ahead. We know from our own experience that the introduction of scrappage incentives can have positive influence whilst in effect, but can also have negative impacts on future vehicle sales. Further, our own analysis has identified unforeseen side effects relative to these programmes with reductions in loyalty rates. Once these programmes ended the loyalty rates returned to normal – demonstrating just how sensitive repeat buyers can be to these types of programmes.

With scrappage programmes coming to an end in Europe, and market-specific influences such as the VAT increase in the UK – it begs the question as to what we can expect in the years ahead.

We will be reviewing our most recent global automotive forecasts, with a detailed view on European Car Demand at a Polk EuroCar Seminar in the UK upcoming on 20 January 2010. For those attending, we look forward to reviewing these forecasts with you, and for those who cannot attend – we hope you will follow Polk’s Forecasting Dashboards or engage with us directly.

The current and projected sales trends have caused many vehicle manufacturers and dealers to increase their focus and attention on customer retention and related programmes. Customer loyalty and optimal aftersales programmes drive positive customer behaviours, and ultimately dealer and manufacturer profitability – key in the difficult sales environment. We will explore some of the best practices we have seen at the seminar, including such areas as predictive targeting and multi-channel integrated communications. Aftersales and service matter, and there are opportunities to succeed and drive results.

And whilst there is no doubting the impact of customer loyalty and retention, no brand can excel in these times without converting the highest percentage of active prospects. There are proven approaches to prioritising focus that generate demonstrable results in increasing conversion rates – and particularly with respect to internet leads. We will discuss our experience in this area at the seminar, and the broader effects the internet and social media are having on the industry.

These are indeed interesting times, but there remain opportunities for the taking.

Posted by Norm Marks, Vice President & Managing Director, Northern Europe, Polk (01.13.2010)

Light vehicle sales for 2009 were 10.4 million, the lowest level in 27 years and 21.2% lower than 2008. Polk predicts the light vehicle market will be 11.5 million units in 2010, according to its most recent U.S. automotive forecast. We believe wealth accumulation and improving consumer confidence added to GDP growth in the 4th quarter of 2009. We feel GDP growth in 2010 will be slow but steady at 2.9%.

It is clear that we are in a recovery; however, risks to the pace of economic growth remain. As Government stimulus programs end, consumers must have confidence to continue spending and businesses need to invest and hire, otherwise the economic recovery could slow in 2010.

We are encouraged by a light vehicle industry SAAR above 10 million for three consecutive months and record low inventories at dealerships. While industry levels remain far below their normal levels, there seems to be some momentum out there.

The latest Polk light vehicle forecast is available free for your download. This month's forecast discusses December 2009 sales, our economic outlook and our light vehicle forecast for the year ahead. I invite you to read the January edition of the forecast report available on Polk's forecasting dashboard. For a full copy of Polk’s U.S. Light Vehicle Forecast Report,  please visit Polk's Forecasting Dashboards today.

U.S. Light Vehicle Sales Forecast

Posted by Dave Goebel, North American Forecast Consultant, Polk (01.08.2010)

Top global auto manufacturers rely on Polk’s automotive forecasts to analyze, simulate and forecast short- and long-term vehicle demand. Now, you can access a free snapshot of our global forecast via the Polk Global Forecasting Dashboards.

You’ll find the latest analysis and predictions for select markets around the world. The new Polk Global Forecasting Dashboards will be updated regularly so check back often to ensure you have the most updated information.

Sample: Global Light Vehicle Development

Posted by Polk (12.15.2009)

Small cars can provide ultra luxury, too! Luxury OEMs, Rolls Royce and Aston Martin have both announced new releases of small cars in Europe.

Rolls Royce recently announced they are planning to release a special edition Mini Cooper in 2010. Mini Cooper and Rolls Royce are both owned by parent company, BMW. It makes sense to offer a minicar to wealthy Rolls Royce owner garages that is easy on the environment, yet still allows the posh comforts to which they are accustomed.

Aston Martin is also working on a minicar called the Cygnet for the European market. The Cygnet will help the automaker comply with the 2012 emissions regulation. Aston Martin is partnering with Toyota to utilize the iQ platform, but the exterior and interior plans are said to meet the Aston Martin luxury expectations. In the recent minicar analysis I wrote, titled "Will Super Small Cars Generate Super Small Sales", the Cygnet, included in the Western European automotive forecast, was expected to sell 625 units in Western Europe by 2014.

So the big question... With a Mini Cooper starting at $20K and a Rolls Royce Phantom going for $380K+, how much will the Mini Cooper Rolls Royce Edition cost? Anyone ready to place an order?

Posted by Margaret Zewatsky, Global Market Analyst, Polk (11.24.2009)

The Ford Ka minicar, popular in Europe, will not be sold in the U.S. In an article by Automotive News released on November 9, Alan Mulally said the Ka is too small for American tastes. Aside from me immediately agreeing with him, I thought of the recent minicar analysis I wrote titled, "Will Super Small Cars Generate Super Small Sales". The market for minicars in the U.S. is small -- the segment is not forecasted to grow greater than 1% of the U.S. market. If I were an OEM prioritizing my U.S. lineup for the next 5 years, I would consider skipping the minicar segment and focusing on the B segment and the crossovers. Yet Fiat, GM, BMW, Hyundai, Toyota, and Volkswagen are all planning launches within the next 5 years, so there must be some common rationale for offering a minicar.

All this makes me wonder...

• Are so many manufacturers launching minicars to ensure they meet the new CAFE standards?
• Will the automotive forecast hold true or will the American consumer start demanding minicars and if so, will the OEMs be ready?
• Is Ford trying to make the most of the Fiesta launch in early 2010 and drive more volume by not launching a minicar?
• Or is Alan Mulally right and the B segment vehicles are the smallest cars Americans will purchase?

What do you think?

Posted by Margaret Zewatsky, Global Market Analyst, Polk (11.10.2009)

There's still a lot of press regarding automotive industry challenges like the recent GM and Chrysler bankruptcies and related dealer closings, but has anyone looked at the domestic  OEM’s market share lately? I have and the industry trend is very sobering – GM, Ford and Chrysler combined retail market share has dropped over 10 percentage points during the last five years and is currently hovering around 40%. Yes, almost two out of every three vehicles currently purchased at retail in the U.S. is an import. I know that the definition of an import is fuzzy at best with Hondas built in Ohio and Subarus built in Indiana; but for the purposes of this discussion, let’s consider anything not made and/or distributed by the Detroit Three an import. We’ll also count future Fiats and Alfas as domestics since they will be distributed through Chrysler dealers.

My crystal ball is as cloudy as anyone else's, but I don’t see this sharp downward trend reversing in the near term. With the impending demise of Saturn and Pontiac, the reduction in GM and Chrysler dealerships and the heightened import competition (particularly Hyundai, Kia and VW), Detroit Three share can’t help but continue to slide even further. Add to the mix a newly refocused Toyota and vehicles from China and India on the horizon, and one can only wonder where the domestic share will bottom out.

I can say that from R. L. Polk's automotive forecast, we expect the Detroit Three total market share (including fleet units) to stabilize around 40% over the next five years. Even with Ford's recent uptick in share, I predict the Detroit Three to account for only 25% to 30% of the retail U.S. market within the next five years. What's your forecast, and what, if anything, can the Detroit Three do to become the Big Three again?

Posted by James Dimond, Vice President of Global Network Planning, Polk (10.28.2009)

Join me and my colleagues from Polk on November 3rd-5th at AAPEX 2009, located in the Sands Expo Center at the Venetian Hotel in Las Vegas, NV. On November 3rd, Uwe Biastoch and I will present: "The New Global Automotive Outlook—What Will the Recovery in Global Volumes Mean to You?"

The global automotive aftermarket industry is at a crossroads. Challenges of the global economy, reductions in global vehicle demand, the contrast between saturated and emerging vehicle markets, changes to the automotive manufacturing landscape, and new players looking to dominate the global stage... what does all this mean to you? Come hear how the ever-changing global automotive forecast is expected to change our industry in the years to come.

You’ll learn about:

• The economic outlook of the U.S., Europe and Asia
• How new vehicle registrations, production and the global vehicle population are expected to change in the coming years
• How the global aftermarket may evolve in years to come

Meanwhile, Polk will be displaying its data-driven solutions for the global Automotive Aftermarket & Commercial Vehicle industries at the 2009 Automotive Aftermarket Products Expo (AAPEX). Stop by Polk Booth #838, to learn how Polk can help you address some of your toughest business challenges:

• Information Process Management
• Inventory Management
• Forecasting
• Global Vehicle Volume Analysis
• Target Marketing
• VIN Decoding
• Recall Campaigns
• Commercial Aftermarket Demand
• Fleet Profiling
• And More

Click here for more information or to register. We’re looking forward to seeing you there!

Posted by Dave Goebel, North American Forecast Consultant, Polk (10.19.2009)

About half the size of a Ford F150 pickup truck, minicars get great gas mileage, are reasonably priced and have a distinctive style inside and out. Minicars are on their way to the U.S. in a big way with six OEMs investing in new minicar launches over the next 5 years to compete with the already launched Smart Fortwo. In the soon to launch models, such as the Volkswagen Up! and Scion IQ, you can expect to get upwards of 65 miles per gallon for a price that is light on the wallet, too. With a VW Up! starting at $9K or a premium packaged Fiat 500 starting at $16K, this should be a deal for many.

Although the minicar segment may be relatively new to the U.S. market, it's an established segment in automotive markets across the globe from Western Europe to China and India. In 2008 there was only 1 minicar (Smart Fortwo) available in the U.S., but in Western Europe there were 48 and in China there were 18 models for sale. Polk’s automotive forecast projects the minicar segment in the U.S. to remain below 1% of all light vehicle sales through 2014 despite growing over 500% from 2008 to 2014.

If you want to learn more, we just released a Polk View titled "Will Super Small Cars Generate Super Big Sales?" The Polk View discusses topics relating to the minicar segment’s sales trends in Western Europe, China and the U.S.; how these minicars have redefined small spaces; who are likely buyers for the soon to launch minicar models in the U.S.; and what's the motivation for OEMs introducing mincars to the U.S.

I invite you to read the article and let me know your thoughts about how minicars will be received throughout the globe, who will buy them and would you consider buying one yourself?

Posted by Margaret Zewatsky, Global Market Analyst, Polk (10.08.2009)

From the "Umweltprämie" (environmental bonus) in Germany to Plan 2,000€ in Spain to "Cash for Clunkers" in the U.S., governments around the globe are stimulating their automotive industries through programs that allow consumers to trade in old vehicles for newer, more fuel-efficient mod-els. While these programs are very popular among consumers, we have seen a rising wave of crit-icism to the effect that such programs are "a useless waste of money," that they constitute preferential treatment for one industry over others, that they have "no actual effect" on sales trends and that automotive demand will collapse entirely once these programs expire. What is the truth? Are these stimulus programs worthwhile?

To find out, I took a look at Polk’s automotive forecasts. I found that global sales will be well over four million units higher in 2009 than they would have been without the stimulus programs. In the context of one of the most severe recessions of all times, this 7% boost in demand is a blessing for carmakers, suppliers and dealers alike.

Global New Registrations of Light Vehicles

It cannot be denied that some of these additional sales actually represent advance 2010 demand, meaning that consumers who planned to buy a new vehicle next year are choosing to do so now. But, of the 4.2 million additional vehicles that will be sold in 2009, just one million are sales that would have been realized in 2010. Rather, most of the growth in demand for new vehicles can be attributed to the rising motorization rate in some countries (e.g. China), and the fact that new cars in some countries are now so inexpensive that many consumers who previously drove used cars are now able to afford a new car for the first time.

It is true that global registrations will fall once again in 2010. But this does not justify the conclusion that the stimulus programs are a curse and not a blessing. After all, we must keep in mind that these programs will have a net positive effect of well over three million sales in 2009 and 2010 globally. All in all, I think these government stimulus programs must be seen as a good thing, not only for carmakers, dealers and suppliers, but for the many consumers who may never have been able to afford a new vehicle otherwise and, above all, for the men and women whose jobs were saved by these programs.

Posted by Ulrich Winzen, Chief Analyst, Polk, Essen, Germany (08.20.2009)