Monday, January 31, 2005

NADA: U.S. vehicle sales should rise slightly in 2005

By John Porretto / AP Auto Writer

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NEW ORLEANS -- New vehicle sales will rise slightly in the United States this year on the strength of a growing economy, strong demand for crossover vehicles and a continuation of consumer incentives, the National Automobile Dealers Association predicted Sunday.

NADA chief economist Paul Taylor, speaking at the organization's 88th annual convention, projected new car and light truck sales of 16.9 million units in 2005, up from 16.86 million in 2004.

Autodata Corp., another source for vehicle sales, pegged last year's U.S. tally at 16.91 million units -- one of the best on record.

Taylor's prediction is in line with many industry forecasts. General Motors Corp., the world's largest automaker, has said it expects the U.S. market to be down slightly in 2005, while No. 2 Ford Motor Co. predicts business will be flat.

"The key to sales of 16.9 million will be the continued strong economy and sustained incentives," Taylor said. "If manufacturers increase incentives, sales over 16.9 million units are clearly possible."

U.S. vehicle sales have topped 17 million only twice -- in 2000 and 2001, according to Autodata.

The health of the auto industry is considered key to the nation's economy. GM has said it alone accounts for roughly 1 percent of the national gross domestic product, which measures the value of all goods and services produced within the United States.

In addition, automobile sales account for approximately one-fifth of total retail sales tracked by the U.S. Commerce Department.

The NADA expects incentives to average about $2,500 a vehicle this year. The average incentive for each vehicle sold in the United States in December was $2,512, a 2.3 percent increase from December 2003, according to Edmunds.com, which provides online vehicle buying information.

Taylor said he expects the growth in sales this year to come largely from crossover vehicles and large cars.

Crossovers, which have characteristics of a car, minivan and sport utility vehicle, seem to be a happy medium for drivers who like the stylishness and on-road command of an SUV but don't necessarily need the off-road ruggedness.

Taylor said the increasing number of crossovers on the market -- models such as the Nissan Murano and Ford Freestyle -- has led to a decline in bigger, truck-based SUVs -- more so than rising fuel prices.

As for individual automakers, Taylor said he expects GM and Ford to at least maintain their share of the U.S. market in 2005, helped by a slew of new vehicles introduced in the past several months.

But he also expects Asian brands to continue to expand their businesses in the United States -- a common pattern in recent years.

As a trio, Japan's Big Three automakers -- Toyota Motor Co.p., Honda Motor Co. and Nissan Motor Co. -- saw their U.S. market share rise from 24.1 percent in 2003 to 26.2 percent in 2004.

Meanwhile, GM, Ford and Chrysler saw their combined share fall to an all-time low of 58.7 percent last year, down from 60.2 percent in 2003.

------ On the Net: National Automobile Dealers Association: http://www.nada.org