J.D. Power Sees Changes in U.S. Auto Market


J.D. Power blog

At a recent industry gathering in New York City, J.D. Power analysts shared insights on changes in new-vehicle demand in the U.S. and global auto market.

Find out what these analysts predict for U.S. and global auto industry.

J.D. Power’s Thomas King, senior director, Power Information Network ® (PIN) recently shared insights on changes in new-vehicle demand in the U.S. market at the Standard & Poor’s/J.D. Power Auto Industry Hot Topics Conference in New York.

Analysts from S&P, J.D. Power, and strategic partner LMC Automotive, presented their views and analysis of the current and future state of the U.S. and global auto industry to an audience of more than 160 Wall Street analysts and reporters.

Sea Changes in the U.S. Auto Market Landscape

• Over the past five to six years, we’ve seen a dramatic shift to compact and sub-compact cars, which are accounting for 45% of retail sales in 2013.

• Despite an increase in the average transaction price, longer loan terms, strong residual values and high used-car prices, low interest rates have helped keep average monthly payments for consumers flat since 2007.

• There may still be risk in the market. The potential for rising interest rates is a key threat to further growth. Even a small increase in interest rates has the potential to take hundreds of thousands of units of sales out of the market.

• Interest rates could go up, but manufacturers, lenders and dealers could elect to continue to offer the great deals, and absorb the difference in their profit margins.

What are the Implications for the Future?

Prior to the Great Recession (2007-2009), manufacturers were content to sell a high volume of vehicles at lower prices and lower profits. Now they are shifting to selling fewer vehicles but at a higher price and margin. “Balancing sales and transaction prices is a challenge for automakers, but they’re doing a good job with it right now,” King said, adding, “Let’s see if they can continue that into 2014.”— John Tews, director of media relations at J.D. Power.