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COMMENT: The worm has turned – now what?

BY MEGAN LAMPINEN. What a difference five years makes. The once terminally ill US light vehicle market has emerged from 2014 as the picture of ruddy health

What a difference five years makes. The once terminally ill US light vehicle market has emerged from 2014 as the picture of ruddy health. Sales for the past 12 months mark the strongest result since 2006, with Chrysler – of all players – the clear star. The US OEM closed the year up 20% after 57 consecutive months of growth.

With 2014 now solidly behind us, attention turns to 2015. For the US market in particular, a handful of key areas will be under close scrutiny.

2015 Ford F-150
2015 Ford F-150

Oil prices – Undoubtedly the falling price of oil will shape market developments in 2015, particularly in the US. With less to pay at the pump, consumers have more in their pocket to spend at the dealership. This means they can buy more cars or more expensive cars. In terms of segmentation, pick-ups and SUVs will benefit, but the market has already been seeing a strong preference for these segments so this will simply continue.

Pick-ups – Ford has invested heavily in its new F-150 pick-up, and everyone will be keen to see how it plays out. After all, the F-Series has been the country’s top selling truck for 38 consecutive years now. The surge in the US truck market in December bodes well for 2015, and the addition of the F-150 will further spice up the mix.

Pricing/incentives – Sales are approaching their peak now, which means a slowing growth pattern moving forward. While the degree of impact will depend on the segment, in general this will mean greater competition. Manufacturers in highly competitive segments may be tempted to turn to discounts and incentives as the overall demand slows. No one is preparing for an all-out incentive war, but there is likely to be a certain increase in sweeteners among the more competitive segments. It will be interesting to see how pricing discipline develops amidst this background.

New product – This year is set to see a wave of new products and OEMs turn out updated variants thick and fast. Performance models are also gaining favour, providing manufacturers the chance for a little extra money as well as a halo effect, if not a big volume boost. Derivatives in general offer a quick and relatively inexpensive means of getting extra money out of the vehicles companies are already selling, and will likely prove popular in the increasingly competitive landscape.

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The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.

Megan Lampinen is Business Editor at Automotive World.

The Automotive World Comment column is open to automotive industry decision makers and influencers. If you would like to contribute a Comment article, please contact editorial@automotiveworld.com.

 

 

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