Vehicle sales in every major segment declined during September, dropping to their lowest levels since 1993.
Market composition is shifting with the influx of compact vehicles and the decline in light-truck and SUV sales. Light-vehicle market share for compact cars has increased from 33.2% of the market to 37.3% over the course of the year. Conversely, large vehicles have contracted from 27.7% to 23.4% of the total market in response to tightening budgets and high operating costs.
SEMA-member companies rely heavily on new-vehicle sales to complement their consumer base. From the current Automotive Lifestyles Survey, 27% of enthusiasts claimed their vehicles were purchased new, and 21% had made the purchase within the past 12 months. If fuel prices continue to hold steady at relatively high values and declining new-vehicle sales do not rebound, this shift in composition could prove permanent, ultimately changing the landscape of the specialty-equipment industry.
Consumers are stressed. They continue to express anxiety from persistently high gasoline prices along with tightening credit, rising unemployment and evaporating investment securities. Home mortgages and the absence of loans are crippling their budgets. Consumers are avoiding large purchases, with new vehicles being a top priority of dropped items. Of those still in the market, there are fewer reasons to buy the gas guzzlers they came to want years earlier.
Falsely painting a rosy picture when one does not exist would be misleading. Spending slowed to a crawl within the final weeks of September, with consumer confidence freezing on the announcement of Secretary of the Treasury Henry Paulson’s $700-billion recovery package.
Unit sales were down in every segment from a comparison to the previous month. The yearly rate continues to be equally disappointing with a large number of double-figure declines. The lone bright spot continues to be the basic compact class with a large increase in units sold compared to the previous year. For the month, however, this segment was down as well. These vehicles are primarily economy cars with entry-level pricing and minimal features—characteristics consumers have come to demand.
For more original SEMA Market Research, visit www.sema.org/research.