Automotive Forecast

Global Passenger Vehicle Sales Increased by 3.8%; First Seven Months of this Year Were 10.5% Above Previous Year

Key findings include:

• July sales increased approximately 10.5% year-over-year due to several incentive programs and more favorable economic conditions
• New registrations in Eastern Europe increased in July (+26%) and were led by the scrappage premium in Russia
• For the remainder of the year, sales growth rates will turn negative due to the expiration of several scrappage premiums in Western Europe

Forecast updated on August 11, 2010 with data from July 2010 YTD.

Click here to visit the forecasting page and download the free Global Passenger Vehicle Market Monthly Forecast Report.

Posted by Ulrich Winzen, Chief Analyst, Polk, Essen, Germany (08.12.2010)

The July YTD data shows the passenger vehicle sales forecasting through 2011 for Spain.
 

Key Findings:

• In July 2010 the Spanish car market reached its lowest level for a month of July since 1995
• The end of the scrappage premium and the increase of the VAT from 16% to 18% had a strong and negative influence on registrations
• The strong positive effects in the first half of 2010 pushed the market to 1.01 million new registrations this year
• The forecasted decline of the Spanish market in 2011 (which will reach a maximum of 1 million new registrations) is due to the weak economic framework and missing positive special effects

Click here for the latest analysis and predictions for select markets around the world. Polk's Global Automotive Forecasting Dashboards are updated regularly. Be sure to check back often to ensure you have the most updated information. You can also click here to subscribe to receive our Knowledge Center and Forecasting updates via email.

Posted by Ulrich Winzen, Chief Analyst, Polk, Essen, Germany (08.05.2010)

I was with my family this weekend at the Irvine Spectrum, a popular open-door shopping and entertainment center in Orange County, California. I happened to stumble upon the Ford Fiesta Lounge display, and of course couldn't help but inspect every inch of it, especially given my prior experience in experiential marketing at Mazda North American Operations.

As expected, the display was professional, and every aspect truly aimed at reaching that young and trendy customer Ford is seeking with the launch of the new Fiesta. Bright colors, upbeat music, use of Apple iPads throughout, and young attendants ready to answer any question you may have.

Although I had already seen the Fiesta at auto shows, somehow the car looked even more attractive in that setting, especially the hatchback in that bright green used in advertising. The trunk space was surprisingly roomy, and there is no doubt that Ford was trying to convey that the Fiesta is no cheap entry-level car, with the use of leather seats in both display cars, a feature not commonly expected in that category. That option, however, will typically take the sticker price closer to $20K, at which point you might as well consider an entry level Focus or base Fusion.

Will consumers buy into the new Fiesta and into small cars? Judging from the several product entries into that category, OEMs are betting consumers will. Polk forecasts that the small car segment will gain a growing share of the industry, with Fiesta joining the ranks of competitors Honda Fit and Toyota Yaris.

Will the Fiesta, and this type of automotive marketing, help Ford gain share in import-friendly territories such as California? Ford definitely hopes so. While Ford's share in the U.S. (retail excluding fleet) rose from a low of 10.6% in 2008 to a 12.8% year-to-date through May 2010 (Polk registrations), Ford's share in CA only grew by 0.8 pt share (7.4% to 8.2%) in the same timeframe. With California accounting for 16.9% of Toyota Yaris U.S. registrations (15.8% for Honda Fit), you can count on Ford to keep experimenting with initiatives such as the Ford Fiesta Lounge.

Posted by Stephan Gallon, PolkInsight Advisor, Polk (07.28.2010)

There are over 25 different hybrid (gas/electric) cars and trucks sold in the U.S right now (and more if you count some of the discontinued models you can still buy off of a dealer's lot). With so much talk about the forthcoming "onslaught" of electric vehicles, many have wondered what happened to the good 'ol hybrid vehicle segment. It's hanging on and actually doing better than last year.

Fact #1: For the first 5 months of this year, we saw over 106,000 new hybrid units enter the U.S. roadways. Our friends at HybridCars.com show just over 109,000 units for the same time period. Short story: the segment is up over 5 percent on a year-over-year basis based on new registrations.

Fact #2: California is still THE hybrid state.  Better than 1 in 5 hybrids are registered in this state.  A few years ago, California represented over 25% of the hybrid segment. Now they represent just over 20%. From a dealer network view or someone pulling together a regional automotive forecast on hybrids, you'd be a fool to ignore California. Buyers there are incented to "think green." Although one thing that really shocked me about their current legislation is that hybrids are disqualified from using high occupancy vehicle (HOV) lanes...yikes!

Fact #3: Prius is still king. Over half of all hybrids sold new are the Prius. Last year they accounted for 44% in the first five months; for the same time this year, they account for one of every two sold new. Good luck to the rest who merely want market share in this segment. 

Prediction: Looking at the results for May and June of this year, our light vehicle forecast for the hybrid segment is between 254,000 to 260,000 new sales in the U.S. This would put us back at the levels we saw in 2006 (we saw 254,000 that year) and definitely below last year's 2009 total of around 290,000 units. 

Go green! And if you're in California, enjoy your single occupant HOV lane privileges while they last. 

For the first five months of this year, the production of cars in Germany rose by a remarkable 26%. It was just a few months ago that the German OEMs reported a 10% decline in their production volumes for 2009 due to strong export reductions (-17%). Only the European scrappage schemes prevented the automakers from an even sharper downturn. These trends intrigued me, so I took a closer look at the significant comeback the German auto industry is making so far in 2010.

Given the German OEMs were impacted by the worldwide economic crisis, especially between the fourth quarter of 2008 and the second quarter of 2009, it is difficult to make a direct comparison with past car production trends. Nevertheless, the output of the first five months of 2010 is only 6% below the record car production level seen in 2007. As for the exports, the May YTD figure shows a 50% increase over last year. While this is a large increase, exports were extremely low during the first few months in 2009.

Exports are currently the only component to give impetus to the production in Germany. The domestic car demand is expected to fall 25% this year due to the expiration of government incentives. For 2010, we expect that 77% of the cars produced in Germany will be exported, as opposed to a 69% export rate in 2009. Incoming orders from foreign markets make the industry look quite optimistic in the medium term. Polk predicts that exports will reach 4.25 million cars in 2010, the second best year ever. Production is currently expected to be 5.5 million units, which would make 2010 the third best year in history — not bad for the first year after the most severe automotive industry challenges ever faced.

Click here to see the latest forecast for German Passenger Vehicle Sales.

Posted by Thomas Mawick, Manager, Automotive Studies, Polk, Essen, Germany (07.09.10)

The April YTD data shows that increased demand in Asia and the NAFTA region helped push global automotive sales.

• Automotive sales increased approximately 13% year-over-year in April due to several incentives and an improving economy
• All regions had a significant (double digits) sales increase for the first four months except for Central and Eastern Europe
• For the rest of the year, the growth rates are forecasted to decline based on the expiration of several scrappage programs in Western Europe and lower overall demand

Find out more by downloading the free Global Passenger Vehicle Market Monthly Forecast Report.

Click here for the latest analysis and predictions for select markets around the world. Polk's Global Automotive Forecasting Dashboards are updated regularly. Be sure to check back often to ensure you have the most updated information. You can also click here to subscribe to receive our Knowledge Center and Forecasting updates.

Posted by Ulrich Winzen, Chief Analyst, Polk, Essen, Germany (05.27.2010)

• John Watt of Petro-Canada provided an interesting insight into why aftermarket service providers leave billions of unperformed maintenance on the table. It seems there is a lot of unsold business that can be corrected with just scheduling appointments regularly and consistently. 
• A  Shop Owner Panel followed and was moderated by Bill Haas, Vice President – Educational and Training, ASA. This panel provided an informative look at how connecting a driver with their vehicle, other vehicles and the roadside infrastructure will impact aftermarket companies.
• Jeff Henning of Ernst & Young discussed the impact of the OEMs on the aftermarket. It seems car dealers will look at doing more business in the aftermarket because of profitability concerns and lack of warranty work. 
• Tony Cristello of BB&T Capital Markets provided a detailed look at the economy and the aftermarket. He commented on the strength of the aftermarket and how the aftermarket stocks outperformed the general stock market.  The economy is still in recovery mode and the forecast is optimistic for the aftermarket.

I think there's some good news based on our annual analysis of the U.S. vehicle population. "For whom and why?", you ask? Read on.

1. The U.S. light vehicle forecast is expected to be 11.5 million units for 2010. That's up from 2009's 10.4 million... we'll take any gains possible. Good news for dealers and automakers.
2. The average age of light vehicles on the road has been creeping up as well. It's just north of 10 years as of September 2009. A decade ago it was 8.8 years. This means vehicle repairs needs should continue to increase for service and repair facilities. Go get 'em aftersales folks!
3. The length of time you and I are typically holding our vehicle is also increasing. See my earlier blog post. Again, good news for both the dealer network and independent service and repair facilities.
4. Light vehicles are scrapping out at a rate of 6.1%. The trick here for marketers is to find out which segment of us vehicle owners are actually eliminating vehicles at a higher rate than other consumer groups. Over the last 60 years, this measure of possible vehicle demand has actually averaged around 6.3% for all cars and trucks (counting trucks in the commercial vehicle market - see the below graph). While the scrappage rate may be a bit higher this year, it's NOT directly implying new vehicle sales will be shooting upward to make up for the "scrapped" or lost units (new sales are driven by several factors, not just a scrappage rate). There are a lot of older vehicles that are natually "dying" now, yet you can't assume this will be compensated by a 1-for-1 replacement. Case in point: if people are holding onto their vehicles for longer periods (see above), it implies you don't get more sales with increasing scrappage rates in all cases.

My question to you: how reliable have you found these factors to be in your business and how do you use such trends?

Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis, Polk (03.30.10)

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)