SEMA eNews Vol. 12, No. 17, April 30, 2009

Consumer Confidence Soars, Retail Vehicle Sales Stabilizing

While retail vehicle sales are down roughly 33% from this time last year, stability could be on the horizon. Economists are embracing favorable views of the road ahead as sales slowly picked up in February and March.

"Industry sales are starting to show signs of stability," said Gary Dilts, senior vice president of global automotive operations at J.D. Power and Associates, in a company press release. "In spite of continued supply corrections, we remain optimistic that the coming months will exhibit stability with a modest increase in the second half of the year."

J.D. Power and Associates estimates a potential of 20 million units within the coming five years. As the credit freeze thaws and the economy stabilizes and rebounds, new opportunities for consumers should drive them back to the showrooms.

Jeff Schuster, executive director of global forecasting at J.D. Power and Associates, echoed his colleague’s optimism.

"We expect market conditions to slowly improve during the remainder of 2009." This scenario, he said, "will lead us back to a solid industry with improved long-term fundamental growth." Although these figures seem inaccurate, one must take into account that people still have obligations and desires for luxuries. When the economy began to sour, many people held off on new vehicle purchases. This new shift could signal the release of their pent-up demand.

Similarly, consumer confidence spiked in April and rallied to its highest level since last November, soaring to 39.3 after a dismal March score of 26.9. According to the latest results from the Consumer Confidence Index, the result from April was even much higher than economists expected, ushering in a newfound sense of hope for a rebounding consumer base.

Gary Thayer, chief economist at Wachovia Securities, outlined a necessary distinction in consumer perception.

"While people are spending a little more freely on everyday items, they are cautious and holding back on expensive items," Thayer told the Associated Press.

The opportunity for SEMA members rests in this distinction. While big-ticket items might not be prudent purchases for consumers at this time, their deep-seeded passion for their hobby should not discourage them from smaller items. Accessories and other bite-size upgrades could be hot-selling items for consumers looking to continue their automotive lifestyle while still keeping spending down to a reasonable level.

SEMA Research & Information Center

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