Light vehicle sales in 2009 were 10.4 million, the lowest level in 27 years, and 21.2% lower than 2008. R. L. Polk & Co. predicts the light vehicle market will be 11.5 million units in 2010, according to its most recent U.S. light vehicle forecast.
Recent data have supported the view of stronger than expected economic growth for the fourth quarter of 2009. The new orders component month-over-month increased 8.6% in December to 65.5, suggesting that new demand is entering the pipeline. These index levels are historically consistent with a sustainable recovery following a deep recession.
In addition, American household net worth is recovering. For the second consecutive quarter, household wealth climbed. With the S&P 500 stock price index rising 5.5% in the fourth quarter of 2009 and home prices expected to appreciate by nearly 2%, wealth accumulation should continue. Rebuilt wealth will help drive personal consumption which includes purchases of durable goods, such as light vehicles.
"We believe wealth accumulation and improving consumer confidence added to GDP growth in the fourth quarter of 2009 and we see slow but steady GDP growth in 2010," said Dave Goebel, North American forecast consultant for Polk. Polk's forecast for Real GDP U.S. growth in 2010 is 2.9%.
Polk's light vehicle industry sales forecast is 11.5 million units. The risks to this forecast are based on the consumer, employment and the housing market. As government stimulus programs end, consumers must have confidence to continue spending and businesses need to invest and hire, otherwise the economic recovery could slow in 2010.
"We are encouraged by a light vehicle industry SAAR above 10 million for three consecutive months and record low inventories at dealerships. While industry levels remain far below their normal levels, there seems to be some momentum out there," said Goebel.
"U.S. Light Vehicle Market Monthly Forecast Report," conducted by R. L. Polk & Co., January 8, 2010. Website: www.polk.com.