Pub. 1 Issue 2

22 www.glancda.org 455,571 421,742 339,240 240,746 267,382 298,458 372,726 410,000 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 2006 2007 2008 2009 2010 2011 2012 2013 Forecast New light vehicle registrations Market is predicted to improve 10% in 2013. Covering Data thru May 2013 Los Angeles Auto Outlook Los Angeles Auto Outlook Comprehensive information on the LA County new vehicle market Market Summary FORECAST Market Should Post Fourth Consecutive Annual Increase in ‘13 New retail light vehicle registrations predicted to exceed 2009 total by nearly 170,000 units! Detroit Three consists of vehicles sold by GM, Ford, and Chrysler. Data source: AutoCount data from Experian Automotive. Annual Trend in County Market The graph above shows annual new retail light vehicle registrations in Los Angeles County from 2006 thru 2012, and Auto Outlook’s projection for 2013. Historical data source: AutoCount data from Experian Automotive. In 2009, when new vehicle sales tumbled to their lows, many industry pundits were downbeat on the prospects for prolonged recovery. And most thought that there was little chance that the market would ever return to peak levels reached in the early to mid 2000’s. Auto Outlook disagreed. At the time, our viewpoint was that the incredibly low sales levels would only add momentum to the market, as pent up demand took hold. Add in the long term prognosis for low interest rates, esca- lated trade in values due to tightened supplies of used cars, eventual improvement in household balance sheets, and significant across- the-board improvement in new products, and we thought new vehicle sales were sure to head higher. And indeed, thru the half way point of 2013, that is exactly what has transpired. Here are the numbers: In 2009, Los Angeles new retail light vehicle registrations were only 240,746 units, while last year’s total was 372,726 an impressive 55% increase during the three year period. And Auto Outlook is predicting that for 2013, the total will approach 410,000 units, close to 2007 levels. What lies ahead for 2014? We think the market will increase again next year. However, the percentage increase is expected to be lower than this year. Here’s why: 1. Pent up demand is easing. The vehicle fleet in the U.S. is still at record-high levels, which will help keep the market moving in a positive direction, but the boost supplied by pent up demand will subside somewhat during the next 18 months. Three Key Market Trends 1. Cars are grabbing a larger share of the county market Car share was up 0.6 points during the first five months of ‘13. 2. Detroit Three post gains. Detroit Three registrations increased 19.7 for the first five months of ‘13 vs. 16.7% for the industry. 3. Green vehicle market share is increasing. Hybrid and elec- tric share increased from 7.8% during the first five months of 2012 to 8.7% this year. 2. Interest rates are likely to increase. It shouldn’t be a big jump, but the consensus view of economists is that interest rates will be heading gradually higher for the foreseeable future. Higher rates would lead to higher monthly payments, hampering consumer affordability for new vehicles. 3. Used car prices have reached their peak. Most used vehicle ana- lysts believe that used vehicle values reached their highs by mid 2013. Softening used car prices reduces trade in values, thereby increasing the net cost of a new vehicle purchase. Bottom line outlook for the county new vehicle market for the rest of this year and 2014: Continued growth, but at a slower pace. YTD '12 YTD '13 % Chg. Mkt. Share thru May thru May '12 to '13 YTD '13 TOTAL 142,029 165,808 16.7% Car 94,635 111,438 17.8% 67.2% Light Truck 47,394 54,370 14.7% 32.8% Detroit Three 25,217 30,187 19.7% 18.2% European 32,899 38,731 17.7% 23.4% Japanese 71,812 83,131 15.8% 50.1% Korean 12,101 13,759 13.7% 8.3%