Low interest rates, consumer preference for more expensive vehicle types expected to support sales gains through 2025
CLEVELAND, April 8, 2022 /PRNewswire/ — Retail sales of new motor vehicles (MVs) in the US are forecast to increase 3.2% annually in unit terms through 2025, according to Motor Vehicles: United States, a report recently released by Freedonia Focus Reports. Suppliers will benefit from a continuation of low interest rates as well as easing supply chain constraints on MV production. Other factors such as increasing disposable personal incomes, an expanding population, and growth in freight, construction, and mining activity will also support growth in retail sales. Further gains over the forecast period will be limited by:
- ongoing retirement of baby boomers
- later acquisition of drivers’ licenses among young people
- the US urban population growing faster than the general population, expanding the size of a cohort with easy access to public transport and ridesharing services
- increasing reliability of vehicles
Ongoing competition from used vehicle sales will continue to restrain sales of new MVs. However, the current limited availability of used vehicles will mitigate this constraint in the near term.
Retail sales of motor vehicles in unit terms are expected to rise 1.7% in 2021. A release of pent-up demand will lead to growth in vehicle sales following delayed purchases in 2020 due to COVID-19 pandemic uncertainty. Low interest rates will further support this trend. However, a vehicle production shortage will raise prices and restrain availability, preventing faster gains.
In value terms, US retail sales of new MVs are forecast to see growth of 5.5% annually through 2025. In addition to rising unit sales, sales in value terms will be boosted by an increase in average vehicle prices and ongoing consumer preference for more expensive SUVs, CUVs, and light trucks, as well as ongoing adoption of more expensive electric vehicles. Sales are expected to grow over 17% in 2021, driven by price increases, dealer markups, and competition between consumers as they draw from pandemic-related savings to buy from a limited supply. Many consumers began making new MV purchases in 2021 that they delayed making the previous year due to the COVID-19 pandemic. However, prices will be driven up as growing demand is met with reduced supply caused by a shortage of semiconductor chips.
These and other key insights are featured in Motor Vehicles: United States. This report forecasts to 2021 and 2025 US motor vehicle retail sales in units and nominal US dollars, as well as production in units. Total new retail sales and production volumes are segmented by type in terms of:
- light-duty trucks
- medium-duty trucks
- heavy-duty trucks
- medium- and heavy-duty buses
Total new vehicle retail sales in value terms are segmented by type as follows:
- light-duty trucks
- medium- and heavy-duty trucks and buses
To illustrate historical trends, total retail sales, total production, and the various segments are provided in annual series from 2010 to 2020.
Other forms of motorized transport equipment, such as all-terrain vehicles; bicycles; military armored vehicles and tanks; motorcycles; off-road agriculture, construction, and mining equipment; race cars; snowmobiles; and parts are excluded from the scope of this report. New MV leases originated are included in volume retail sales figures. Re-exports of motor vehicles are excluded from demand figures.
This report includes the results of a proprietary national online consumer survey of US adults (age 18+). This Freedonia Focus Reports National Survey has a sample size of 1690, screened for response quality, and representative of the US population on the demographic measures of age, gender, geographic region, race/ethnicity, household income, and the presence/absence of children in the household.
More information about the report is available at:
About Freedonia Focus Reports
Each month, The Freedonia Group – a division of MarketResearch.com – publishes over 20 new or updated Freedonia Focus Reports, providing fresh, unbiased analysis on a wide variety of markets and industries. Published in 20-30 pages, Focus Report coverage ranges from raw materials to finished manufactured goods and related services such as freight and construction. Additional Services & Industries reports can be purchased at Freedonia Focus Reports or MarketResearch.com.
Analysis is intended to guide the busy reader through pertinent topics in rapid succession, including:
- total historical market size and industry output
- segmentation by products and markets
- identification of market drivers, constraints, and key indicators
- segment-by-segment outlook in five-year forecasts
- a survey of the supply base
- suggested resources for further study
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SOURCE The Freedonia Group