U.S. Automotive Sales To Grow by 1.9% Next Year
Like so many other industries, the automotive sector was not spared by the current recession. And, in anticipation of slowing sales, automotive marketers sharply reduced ad spending earlier this year. But analysts expect U.S. automotive sales to grow by 1.9.%. Analysts are expecting recovery in industry ad sales in the coming months.
Global Auto Ad Market
Globally, ZenithMedia predicts a 21% drop in the automotive ad market this year. That kind of figure captures attention because the auto ad market amounts to 9% of all advertising. But by next year, the automotive ad market will increase 10.5% over this year’s spending and another 11.4% increase is likely in 2022. At the same time, the global ad market will likely only achieve a 4.4% increase in 2021 and a 4.2% increase in 2022, which means the growth in auto advertising will outpace the rate of the ad market.
The 2019 $32.8 billion U.S. auto ad spending level won’t quite be restored by 2022, despite heading in the right direction. ZenithMedia analysts predict the figure will come in at $31.9 billion for 2022, which suggests that analysts also expect U.S. automotive sales to grow.
In terms of global advertising, auto ad spending by media format broke out as follows last year:
- Digital 42.2%
- TV 31.6%
- Newspaper 10.9%
- Radio 8.3%
- Out-of-home 3.3%
- Magazines 3.0%
- Cinema 0.7%
Digital media’s share of the ad market will continue to increase during the next two years. In fact, that is the only format on a growth trajectory. All other formats will lose market share, with the steepest declines coming from print newspapers and magazines.
Local Auto Ad Market
Locally, BIA predicts that $13.7 billion will be spent on auto-related advertising in the U.S. By media format, the spending breaks out as follows:
- OTA TV 22.7%
- Online 19.6%
- Mobile 16.7%
- Radio OTA 10.9%
This year, 48.3% of all paid local advertising for automotive will take place in digital formats.
U.S. Automotive Sales To Grow by 1.9%
Annual growth of vehicle sales in the U.S. in the last decade was 3.7%. While demand may drop as much as 12.3% this year, we are likely to experience a 1.9% annual growth rate in sales between 2021 and 2025. As difficult as the pandemic has been on many verticals, the automotive sector may benefit from consumers’ desire to stay isolated in their own vehicles for business and pleasure travel. Consumers may hesitate to rush back to ride-sharing transportation and public transit following the pandemic, a trend which will further boost private ownership of vehicles.
Our research showed, during the middle of the pandemic, that about 20% of U.S. adults were considering the purchase of a new vehicle this year. The impact of the extended recession may have slowed down some of these purchases. However, consumers are entering the new vehicle market. These shoppers are concerned about gas mileage and fuel economy, as well as monthly payment options and rebates. While SUVs remain the most popular style, more consumers are looking for hybrid and electric options.
With more ad money shifting to digital formats, your clients need to spend their budgets wisely. Run a Digital Audit, available at AdMall by SalesFuel, on them. And then work with them to improve their digital presence in the market.