1995 US Auto Sales Forecast: Strong First Half, Slow Second Half

Strategic Insights -

As the auto industry approaches the latter half of 1995, industry experts are predicting a strong first six months, but a subsequent slowdown. According to Jeanette Garretty, vice president and director of Industrial Economics at Bank of America, US automobile sales are expected to reach 15.8 million units for the year, with a growth rate of only 4 percent. This is a significant decline from the 1994 growth rate. Additionally, light truck sales are predicted to continue growing faster than passenger car sales, with a 5 percent increase over 1994 totals.

Key Takeaways:

  • US auto sales are expected to reach 15.8 million units in 1995, a growth rate of 4 percent compared to 1994.
  • Light truck sales are predicted to increase by 5 percent in 1995, outpacing passenger car sales.
  • Garretty attributes the decline in passenger car sales to the "lemming-like nature of both car design and strategic vision," with sport-utility vehicles and light trucks driving the market.
  • The 1995 auto outlook also assumes slowing economic growth and rising interest rates, limiting consumer spending growth.
  • Garretty predicts that total U.S. auto sales will slow in the second half of 1995, with consumer confidence and spending growth expected to decline.
  • The forecasting is based on the view that auto manufacturers will manage their pricing strategies to achieve growth in unit sales and improve profits.
  • The use of rebates or subvention financing in the second half of 1995 could lead to profit problems for some manufacturers in 1995 and 1996.

Statistics:

  • US automobile sales: 15.8 million units (forecast for 1995)
  • Growth rate: 4 percent (compared to 1994)
  • Light truck sales: 6.4 million units (predicted for 1995), a 5 percent increase over 1994 totals
  • Passenger car sales: 9.4 million units (predicted for 1995), a 3.2 percent increase over 1994 totals
  • Domestic passenger car sales: 7.4 million units (predicted for 1995), a 4.2 percent increase over 1994 totals

Sources:

  • Bank of America press release, February 6, 1995. Contact: Jack Houseman, 415/622-5324.