Falling gasoline prices and a strengthening U.S. economy – especially in the housing market – are expected to help spur sales of light duty pickups into 2015, according to analysis shared by Steven Szakaly, chief economist for the National Automobile Dealers Association (NADA) in a conference call with reporters this week.
He told Fleet Owner that “general economic growth” in the U.S. will be enough to trump any sticker price increases for pickups – especially in the case of Ford Motor Co.’s new 2015 model F-150 with its all-aluminum body – with strong replacement demand continuing to help fuel sales in the commercial pickup segment into next year as well.
Szakaly did however add a word of caution concerning diesel fuel prices as they may not continue to follow the same declining trend being experienced by gasoline in the U.S.
“There’s strong demand for diesel fuel in Europe and India in particular so I am not sure we’ll see the same sort of sustained decline in diesel fuel prices as we’re seeing for gasoline,” he said – noting that the decline in gasoline prices in one reason consumers are expected to switch back to buying pickups and sport utility vehicles (SUVs) next year in growing numbers.
NADA’s current forecast is for West Texas Intermediate (WTI) crude oil to average between $71 and $73 per barrel in the first half of next year before rising to an average of $83 for the second half of 2015.
“Lower oil prices, which translate into lower prices at the gas pump for consumers, increases household spending on other goods and services, resulting in higher growth,” Szakaly (seen at right) said. “If oil and gasoline prices remain low through 2015, we could easily see consumers return in even greater numbers to the light-vehicle market during the second half of 2015.”
Overall, NADA is forecasting that 16.94 million new cars and light trucks will be purchased or leased in the U.S. in 2015, in the main due to rising employment and wages, continued low interest rates and lower gasoline prices.
“The economy will continue to build on the solid growth established in 2014, and we also expect the fundamental conditions to improve in the year ahead,” Szakaly added.
U.S. gross domestic product [GDP] growth is expected to accelerate to 3.1% in 2015, exceeding the 2.1% GDP growth rate expected for all of 2014, with unemployment expected to drop down to 4.9% by the fourth quarter this year, he said.
“Growth is now well above 200,000 jobs per month and our forecast for employment growth is 242,000 new jobs on average per month in 2015,” Szakaly pointed out. “This improvement in the labor market should also benefit wages and incomes. This growth will be moderate, with disposable income rising by 2.5% in 2015. Conversely, corporate profits are expected to increase by a healthy rate of 6.7%.”
He also stressed that increasing sluggish growth in other countries is not expected to derail the economic trajectory of the U.S. – at least not yet.
In particular, growth in China will slow to an average GDP rate of 6.4% in 2015 and then drop to 5.9% in 2016. In addition, growth in the Eurozone is expected to be weak with GDP likely to grow at only 1.4% in 2015.
“This may further dampen demand for U.S. goods and services,” Szakaly said.