Stronger-than-expected sales in first seven months and upbeat economy signal highest annual volume in 15 years
TrueCar, Inc. (NASDAQ: TRUE), the negotiation-free car buying and selling mobile marketplace, projects 2015 sales of new light vehicles will reach 17.2 million units, up from an earlier forecast of 17.1 million units, owing to robust January through July deliveries and a strong economic outlook for the remainder of the year.
Total sales of new cars and light trucks, including those purchased by fleet customers, increased 4.5 percent in the first seven months of the year compared to a year earlier, producing the highest volume since 2006. TrueCar expects full-year sales in 2015 to grow by 4 percent over last year marking six successive years of sales increases, which is a first since the 1920s.
“With consumers appearing to be more confident in the economy and their own finances, we believe the industry is on track to hit the highest level in 15 years,” said TrueCar President John Krafcik. “Combined with the fact that the average age of vehicles on the road remains high by historical standards and interest rates remain low, it’s easy to understand why many consumers are ready to buy.”
In terms of revenue, TrueCar found 2015’s first seven months to be the best ever, totaling $323 billion, up 6.6 percent over a year earlier. Incentive spending as a percentage of the average transaction price during January through July averaged 8.6 percent, an increase of 1 percent. However, this remains below post-recession levels of 10.3 percent. Industry average incentive spending hit $2,790, up by $88 from the same period last year.
“At the current pace automakers should bring in a record $560 billion in revenue this year,” Krafcik said. “The impressive revenue gains were a by-product of a rich mix of high-margin vehicles, resulting from increasing sales of premium brands, pickups and crossovers, against a backdrop of restrained incentive spending.”
Current U.S. economic indicators paint a positive consumer spending landscape for the remainder of the year. According to the Bureau of Economic Analysis, GDP increased by 2.3 percent in the second quarter, U.S. jobless claims reached a four-decade low in July and unemployment remains at a seven-year low of 5.3 percent. Furthermore, the most recent personal income report topped $68 billion as of June, a 0.4 percent gain.
