Kbb.com Forecasts Ten Percent Year-Over-Year Increase In January New-Car Sales

Kelley Blue Book's www.kbb.com, a provider of new car and used car information, projects January new-vehicle sales at thirty percent below the December high, coming in at approximately 900,000 units for the month or a 13.2 million Seasonally Adjusted Annualized Rate (SAAR). At 900,000 units overall, sales would be up nearly ten percent year-over-year.

Through 2012, Kelley Blue Book forecasts new-vehicle sales to surpass 13.3 million units on expectations of continued moderate U.S. economic recovery and rising demand from consumers with aged vehicles in need of a replacement.

"Our analysts have produced a regression model that explores unemployment, housing, consumer confidence, and seasonal patterns to assist with our sales forecast for the year," said Alec Gutierrez, Senior Market Analyst of Automotive Insights for site. "Given current market conditions and our expectations for 2012, we believe sales will continue to improve at a conservative pace in 2012."

Sales will continue to improve in 2012 due to heightened demand stemming from the increasing age of vehicles on the road today; currently 10.8 years on average. Improving unemployment conditions should also help drive sales in 2012. In December 2011, the unemployment rate dropped to 8.5 percent, as the economy added 200,000 non-farm payroll jobs.

Consumer confidence and housing are projected to remain relatively stable through 2012 and will not influence sales significantly. If current projections hold true, 2012 will be another solid year for manufacturers, but significant downside risks that could slow down the momentum of the sales recovery remains.

"We remain especially concerned about the ongoing European debt crisis and the heightened tensions with Iran as potential events that could derail the current U.S. vehicle sales recovery," said Gutierrez. "The European debt crisis has been of particular concern in recent weeks due to the debt rating downgrade of France, Portugal, Italy, and other European economies, leading to concerns for their ability to generate interest in future bond offerings."

A recent announcement by the World Bank, projecting a global slump in economic growth as in 2012, is only adding to financial health concerns for the overall Eurozone. The World Bank cut its 2012 growth forecast for the seventeen countries that use the euro as their primary currency from 1.8 percent to -0.3 percent, all but proclaiming Eurozone nations to already be in a recession.

The bank also cut its expectations for U.S. growth in 2012 from 2.9 percent overall, down to 2.2 percent. The bank’s Chief Economist Justin Yifu Lin warned that a European recession could trigger a global freezing of capital markets, similar to what occurred in 2008. If that weren’t enough, tensions with Iran could spell additional trouble, especially if Iran follows through on threats to close the Strait of Hormuz, perhaps prompting military intervention by the U.S. Combined, this would certainly lead to oil prices in excess of the $140 per barrel peak that occurred in 2008, which would be disastrous for the economic recovery currently underway.

Ford will look to the redesigned Focus, all-new Fiesta, and the F-150 to drive sales in January. The 2013 Escape and Fusion redesign also might help to keep Ford’s sales momentum strong.

After losing market share from its unintended acceleration recalls in 2010 and the inventory shortages resulting from the earthquake in Japan in 2011, Toyota has plenty of room for improvement in 2012. Toyota will look to the redesigned Yaris, Camry, and all-new Prius V to inflate sales in January.

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