U.S. auto sales this year should be about the same as in 2006, but increased truck sales could be a bright spot after last year’s disaster for the three Detroit-area automakers, the National Automobile Dealers Association’s top economist said Sunday.
Paul Taylor, speaking at the association’s annual convention in Las Vegas, predicted that sales in 2007 will be around 16.5 million vehicles, flat with a 2006 that saw the domestic brands lose sales and market share primarily to Honda Motor Co. and Toyota Motor Corp.
He predicted that the economy will grow around 2.5 percent this year, strong enough to keep unemployment stable around 4.6 percent to 4.8 percent. He also said it appears that oil supplies are strong, and that will keep gasoline prices in the $2.60 or $2.70 per gallon range nationwide, enough to shift some buyers back toward trucks or sport utility vehicles.
"That’s different from the middle of last year when we were looking at three and a quarter and people were concerned that gas prices might go to $4 or $5 a gallon," he said.
All of the Big Three saw declines in U.S. sales last year. General Motors Corp.’s sales dropped 8.7 percent from 2005, Ford Motor Co.’s sales declined 8 percent, and DaimlerChrysler AG’s were down 5 percent.
Domestic brands generally are more dependent on high-margin trucks for profits, so lower gas prices could be good news for them. On the other hand, nearly every manufacturer is competitive in every segment now, especially in pickup trucks, Taylor said in an interview.
"The mix of new vehicles sold becomes more desirable from the manufacturers’ point of view and the dealerships’ results," he said.
In some areas of the country, the homebuilding industry is starting to recover from a slump, and Taylor said he expects that to continue. Pickup truck sales generally do well when the home building industry is on the rise.
Taylor predicted that trucks would make up 54 percent of the U.S. vehicle market this year, up from 53 percent last year.
Crossover vehicles, though, continue to be the stars of the car market. Sales of the vehicles, built on car underpinnings but with the seating capacity and many attributes of an SUV, rose 9.1 percent last year, and Taylor expects the growth to continue by another 8 percent in 2007.