Auto sales are expected to soar in 2016. (Kris Turner/IndyStar) Wochit
Ray Skillman’s Jesus Angeles, center, spoke with customer Lacy Boyd, right, while his wife, Donella Boyd, transferred possessions from their trade-in car to their new GMC Acadia on Feb. 16, 2016, at Ray Skillman Northeast Buick GMC.(Photo: Michelle Pemberton/IndyStar)Buy Photo
Automotive sales are projected to soar in 2016 and usher in another banner year for automakers, who are expected to remain unscathed by an industrywide slowdown in manufacturing.
The auto industry expects to sell or lease 17.7 million light-duty vehicles this year, a 2 percent increase from 2015. That news is a relief to auto manufacturers, which haven’t seen business trail off as it has in other manufacturing sectors.
“At the end of the day, in 2015, we had the best sales year for autos since the Great Recession, and the prospects for growth this year also are pretty good,” said Chad Moutray, chief economist for the National Association of Manufacturers. “I would suspect we’ll have more than 17 million sold this year.
“We’re not just talking about the Big Three automakers who produce the traditional automobiles. We also have a lot of foreign automakers in the U.S., which has been an attractive destination for automakers.”
The news bodes well for Indiana, whose second-largest manufacturing sector is automotive. It is a $15.8 billion industry in the state.
The projected growth follows an upward trend in the automotive sector. Last year, 17.4 million new light vehicles were retailed, a 5.8 percent increase from 2014, according to the National Automobile Dealers Association.
The average transaction price of a new car or light truck was $33,269 in 2015, according to the association.
Indiana’s low unemployment creates worker shortage
Honda, which posted an all-time sales record in 2015, is on track to have a banner year in 2016. The automaker, which has a facility in Greensburg, employs more than 2,000 people and produces the Civic sedan.
It opened the facility in 2008 and has invested more than $97 million in it.
“With Honda’s strong cadence of new models through 2016, we look to carry this momentum forward this year,” company spokesman Chris Abbruzzese said. “Already, our January sales have been robust.”
Civic sales in January increased by 43 percent compared with January 2015.
Increased consumer confidence is one of the main reasons people are buying cars, said Barry Bosworth, an economic expert at The Brookings Institution, a Washington-based think tank.
“Basically, consumer demand for the auto industry is strong, and it reflects the fact that for many years since the financial crisis, automobile spending was kind of low,” he said. “The average age of the automobile stock got older than usual, and there is a pent-up demand for automobiles.”
Customer Samantha Love, who recently purchased a vehicle, played checkers with her daughters Tiarra Bernard, right, and Kenyannah Love, center, at Ray Skillman Northeast Buick GMC on Feb. 16, 2016. (Photo: Michelle Pemberton/IndyStar)
The average age of a vehicle on the road is about 11 years. Couple that with the fact that credit is easily available and there’s bound to be a continued increase in auto sales, said Timothy Slaper, director of economic analysis at the Indiana Business Research Center at Indiana University.
Slaper said low gas prices also have increased consumer confidence.
People also feel more secure in their employment, which helps boost automotive sales, said Michael Hicks, an economic expert at Ball State University.
“Labor markets are tight, people who want jobs have them, and they can get loans,” he said. “That has pushed automobile sales to record levels. There’s no immediate downtrend with that.”
Although the manufacturing industry overall will slow and the economy might hit a few bumps, Hicks said, it’s not likely to deter automotive sales.
“If the stock market drops 10 percent, it’s not going to change most people’s choice to buy a car,” he said.
The ripple effect of automotive sales extends from manufacturers to parts suppliers, dealerships and businesses that support auto facilities.
Tom Ackerly, general manager of Ray Skillman Northeast Buick GMC, said 2015 was a record-setting year and he expects to surpass it by 10 to 15 percent in 2016. Trucks and sport utility vehicles are very popular right now, he said.
“Obviously, 2008 was a tough time for a lot of places. A lot of dealerships had to make cutbacks. We saw some dealerships in the city go out business,” he said. However, sales have returned to pre-recession levels. “I’ve been in the business 20 years, and we’re back up to as big of sales as any year that I can remember.”
Tom Ackerly, general manager of Ray Skillman Northeast Buick GMC, said 2015 was a record-setting year and he expects to surpass it by 10 to 15 percent in 2016. (Photo: Michelle Pemberton/IndyStar)
Ackerly, like the economists, pointed to lower gas prices, consumer confidence and the aging fleet of cars on the road as the reasons people are buying. He said customers are thrilled with the new technology that’s included in vehicles, such as wireless phone connections and digital monitors.
With most cars on the road produced at the dawn of the smartphone, it’s a new world for auto buyers, Ackerly said. The boost in business and interest in technology led Ray Skillman to hire tech associates at its dealerships.
“We have hired the younger generation as product specialists,” he said. “The cars are coming with more technology in them. We have hired product specialists that have gone through extensive product training. They are usually the first person the customers meet.
“Customers are enjoying the experience of purchasing, the experience of buying a new car,” he said.
Call IndyStar reporter Kris Turner at (317) 444-6047. Follow him on Twitter: @krisnturner.
More people are 60 days behind on their car loans, Experian Automotive says More people are falling at least two months behind in making payments on their auto loan, a new report showed Tuesday. USA TODAY
The auto industry is expected to sell or lease 17.7 million light-duty vehicles this year.
Auto is Indiana’s second-largest manufacturing sector, representing $15.8 billion.
The average age of a vehicle on the road is about 11 years.
Hoosier manufacturing expected to slow in 2016
Subaru plans production of new crossover in Lafayette
2016 Honda Civic sedan to begin production in Indiana
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