Detroit automakers could thrive in 2015 if low gas prices boost sales of larger vehicles. Image source: Fiat Chrysler Automobiles.
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Do you remember around this time last year when automotive sales were hindered for a couple of months because of severe winter weather that caused consumers to all but refuse to visit dealership lots? It was brutal.
The industry appears poised to start 2015 on a much better foot.When sales are reported next week, don't be surprised to see many automakers post huge year-over-year gains. Let's dig into some numbers and highlight some projected winners and losers.
First, looking at total industry figures, new vehicle sales are expected to reach 1.44 million units in January, according to TrueCar. If those sales materialize as many expect, it would be a more than 13% increase over a year ago.
Now, one thing most people don't pay attention to is the difference in the amount of selling days in a month from year to year. January 2015 will have 26 selling days, a slight advantage compared to last January's 25. Adjusting for the difference, the industry's deliveries are still expected to rise nearly 9%.
Switching gears, let's look at some winners and losers according to a forecast from the crew at Edmunds.com.
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Table source: Edmunds.com.
There are a couple of interesting stories to follow throughout 2015. First, investors who held Ford Motor Company shares through 2014 are hoping to see sales accelerate sooner rather than later-- Ford launched 16 new vehicles in 2014, compared to only five in 2013.However, while sales will absolutely increase for the folks at the Blue Oval in 2015, it will likely happen in the second quarter, when Ford's best-selling vehicle, the F-150, is being produced at full speed.
Another interesting story will be whetherFiat Chrysler Automobiles can continue its hot streak. Last year FCA's new vehicle sales topped 2 million in the U.S., an impressive 16% increase over 2013. That was far ahead of General Motors , Toyota, and Ford with their respective 5%, 6%, and -1% changes in sales.
With January expected to be a strong month, what does that mean for the industry in 2015?
The road ahead
"2014 was a year of recovery and growth for the auto industry, and that trajectory continues into 2015 as TrueCar expects new vehicle sales will reach 17 million units," said Eric Lyman, vice president of industry insights for TrueCar, in a press release. "Even more compelling is our projected revenue growth of 4.8 percent, which is the result of increasing sales volume and rising average transaction prices."
As the economy continues to strengthen and unemployment returns to pre-recession levels, expect new vehicle sales to continue moving higher. Another benefit for the automotive industry is the significant decline in gas prices, which has put extra cash in consumers' pockets. Detroit automakers could be poised for stronger-than-anticipated gains in 2015 if gas prices remain low and consumers start purchasing larger SUVs and trucks at an accelerated pace. Overall, expect 2015 to be a strong year, as investors in the automotive industry should benefit from increased sales and profitability.
The article New Vehicle Sales Expected to Surge in January and Through 2015 originally appeared on Fool.com.
Daniel Miller owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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