NADA MEETING: 2003 NEW-VEHICLE SALES TO HIT 16.5 MILLION

San Francisco February 2, 2003; New-vehicle sales in 2003 will remain relatively strong—16.5 million units—because underlying economic factors are in better shape than most realize, said NADA chief economist Paul Taylor during his annual economic forecast presentation. (If the United States goes to war with Iraq, Taylor’s prediction falls to 16.3 million units.)

Why Taylor is optimistic about 2003:

• The number of vehicles per household continues to grow. • Low mortgage interest rates are spurring homeowners to refinance, freeing up cash for vehicle purchases. • Unemployment is still at "a reasonable rate." • The dealer optimism index—considered a good indicator of new-vehicle sales—is relatively high; likewise consumer confidence levels. • Economic growth is "reasonable." • Net household wealth is growing. Taylor also predicts a continued hot market for used vehicles, particularly certified. Light trucks, which now account for more than half of all new-vehicle sales, will continue to be swept along by the popularity of the smaller crossover utility vehicles (CUVs). And automakers will begin shifting from interest-rate incentives to cash incentives as rates begin to creep back up.

Story Courtesy NADA