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

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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.

 

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