CIT Predicts Light Vehicle Sales Will Continue to Grow
20 January 1999
CIT Predicts Light Vehicle Sales Will Continue to Grow
LIVINGSTON, N.J.--Jan. 19, 1999--
Outlook For Industry Positive Despite Slight Slowdown in 1999
America's fascination with sport utility vehicles will drive positive growth in light vehicle sales over the next three years, according to The CIT Group, Inc. and its first annual Light Vehicle Outlook.
Although the forecast, which was published this month, predicts that domestic sales will dip slightly to 15.10 million vehicles in 1999 - a 0.5 percent decrease from 1998 - growth will rebound in 2000 when sales are expected to reach 15.40 million vehicles. The Outlook projects that 7.70 million trucks will be sold in 2000 - a 12.4 percent increase over 1997 levels - and that car sales, which are projected to reach the same level as trucks by 2000, will be far below the 8.24 million vehicles sold in 1997.
"This year's decrease will be largely due to slower growth of real disposable income, which is a key indicator of vehicle sales activity," said Michael Paslawskyj, Vice President of Economic Research for The CIT Group, Inc. "Fortunately, the decrease will be offset by the increasing popularity of sport utility vehicles, which have become so prevalent in the United States they may cause car sales to account for less than half of all light vehicle sales by 2001."
The Outlook also shows that market saturation and long-term reliability of newer cars could have a negative impact on light vehicle sales. "There are more cars in the United States than licensed drivers," said Paslawskyj. "Additionally, the light vehicle industry must rely on scrappage rates to boost demand, and these are declining."
He adds that in the last 10 years the quality of vehicles has improved dramatically, and turnover is becoming less prevalent. "Because vehicles now have an extended road-life, people can wait longer to purchase a replacement," he said.
Decline In Imports
According to the Outlook, light vehicle imports should see a slight decline in 1999 due to the weakening dollar and its effect on import prices. Import sales are expected to drop from 2 million vehicles in 1998 to 1.9 million in 1999, and 1.89 in 2000. At only 12.3 percent share of the market, the level of import sales in 2000 will be the second lowest since light vehicle statistics began to be compiled in 1976.
As with domestic sales, imported truck sales are on the rise, while imported car sales are declining. According to Paslawskyj, the reduction in imported car sales is a reflection of domestically located foreign-car plants that are capable of producing 3 million foreign vehicles in the United States and Canada. "Most moderately priced Japanese cars are manufactured in the U.S., and luxury car production is beginning to follow," he said. "As this trend accelerates, domestic production of foreign cars could displace foreign production altogether."
The CIT Group, Inc. , with over $25 billion in managed assets, is one of the nation's largest commercial and consumer finance organizations. Founded in 1908, CIT offers a variety of financial products to companies in and around the automotive industry. For more information, visit the company 's Website at www.citgroup.com.
For more information or the complete version of the Light Vehicle Outlook, contact:
