Pub. 1 2013 Issue 3

34 San Diego Dealer 103,978 74,517 86,247 97,368 123,680 137,000 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 2008 2009 2010 2011 2012 2013 Forecast New light vehicle registrations Market is predicted to improve 10.8% in 2013. Covering Fourth Quarter 2012 San Diego Auto Outlook Annual Trend in County New Vehicle Market New Vehicle Market Summary San Diego Auto Outlook Comprehensive information on the San Diego County new vehicle market % Chg. Mkt. Share 2011 2012 '11 to '12 2012 Total Registrations 97,368 123,680 27.0% Car 57,936 76,460 32.0% 61.8% Light Truck 39,432 47,220 19.8% 38.2% Detroit Three 23,806 29,409 23.5% 23.8% European 16,309 21,013 28.8% 17.0% Japanese 48,234 61,267 27.0% 49.5% Korean 9,019 11,991 33.0% 9.7% Detroit Three consists of vehicles sold by GM, Ford, and Chrysler. Data Source: AutoCount data from Experian Automotive. FORECAST County Market Predicted to Increase 10.8% in 2013 New retail light vehicle registrations predicted to approach 137,000 units this year 2012 is now in the books and it was a very good year for the county new retail light vehicle market. As pointed out on the right, new reg- istrations moved higher last year, for the third consecutive year. The big question now is what’s in store for the market during 2013. Short answer: slower growth. New vehicle sales are likely to increase again this year, but the percentage gain is almost certain to fall short of the gain in 2012. There are three primary reasons for this: • The labor market is still struggling. The county unemployment rate has come down during the past two years, but is still elevated (8.3% in November of 2012). Too many county residents are searching for work for new vehicle sales to move sharply higher. • Household balance sheets are still on the mend. We have been tracking consumer debt levels for almost 10 years now, and al- though consumers have made headway, the de-leveraging process has not run its course. • Fiscal policy will restrict growth. In order to get public debt under control, the Federal Government will likely be rasing taxes, and cut- ting spending, both deterrents for economic expansion and house- hold income growth. The good news is that there are currently more positive market deter- minants than the negative ones mentioned above. The two primary factors that will almost certainly lead to an increase in sales this year Three Key Market Trends 1. San Diego County new retail light vehicle registrations in- creased 27% from 2011 to 2012, well above the estimated 13% improvement in the Nation. 2. Auto Outlook projects that the county new vehicle market will improve 10.8% from 2012 to this year. The uptick this year would mark the fourth consecutive annual increase. 3. Higher fuel prices during most of last year and many key new vehicle introductions gave a boost to car sales in the county. New retail car registrations were up 32% in 2012, and market share was up 2.3 points. are pent up demand and vehicle affordability . We have been tracking pent up demand for several years now, but it is still the single most significant force driving the market. Consumers delayed purchasing new vehicles during the recession, and as a result, vehicles are old and wearing out. In addition, new vehicles offer a tremendous im- provement when compared to the average 11 year old vehicle cur- rently on the road. This pent up demand is leading many consumers into county showrooms, while strong affordability (aided by record-low interest rates) and improved availability of credit are the final ingredi- ents leading many to purchase a new vehicle. The graph above shows annual new retail light vehicle registrations in the county from 2008 thru 2012 and Auto Outlook’s projection for 2013. Data Source: AutoCount data from Experian Automotive.