Patrick Manzi, Senior Economist
Patrick Manzi,Senior Economist
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Canadian auto dealer met up with Patrick Manzi, NADA Senior Economist, who projected the U.S. new vehicle market would decline this year, if only slightly, and offered a recap of his overview of the industry.
“In 2019, we had 17.1 new light vehicle sales and when I was at the convention last year, I was expecting sub-17 million a year,” said Manzi. “Then we got three interest rate cuts, which kind of gives a little bit of a boost to those people on the margin who maybe weren’t able to afford that payment right now, but could because we had lower rates.”
Manzi said the U.S. also experienced a big fleet push, with around 200,000 or so units compared to the year before. That push helped the industry step over the 17-million mark. The end of 2019 also gave way to high incentives, just under $4,600 per unit, which Manzi said was a new record.
“Certainly, I think we’re going to see incentives continue on into this year as we are projecting the new vehicle market to be in decline a little bit,” said Manzi. “And I think specifically, those incentives are going to be targeted in the crossover segment, because it’s 40.8% of all new vehicles sold in the U.S. or in that crossover segment, part of the bigger 72% light truck segment.”
On electric vehicles, Manzi said there was barely a blip (it’s 1.4% of the whole market), and expects the segment to remain flat this year despite the new entrants. He said it could increase in the next five years to potentially reach 7-8%, but that it will be a niche market in the U.S. as gas prices remain low and charging remains a concern. “We’ve seen a lot of EV activity in wealthier households as a second or third car. You can use the EV to commute, but if you have to drive 500 miles to commute, you’ll use the SUV,” said Manzi.
Charging is also more complicated for younger consumers living in apartments. Manzi said he believes the adoption will be greater among homeowners with a garage or a set parking space where they can charge the vehicle.
In Canada, the federal government launched a zero-emissions vehicle incentive program in 2019 to help boost adoption of these vehicles, and has been investing in charging stations and research and development.
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