According to the latest figures from AutoData Corp., total vehicle sales in the U.S. in January registered 15.3 million units on a seasonally adjusted annualized basis. This is down slightly from the pace of 15.4 million units that were sold in December, but it is a rise of nearly 10% from the total posted in January of last year. For the year as a whole, there were just under 14.5 million total units sold in 2012.
We expect upward momentum in vehicle sales to persist this year, but the pace set in January is a little too strong to be sustained for the entire year. Our latest forecast calls for a total of 15 million units sold in 2013 to be followed by a total of 15.5 million units in 2014. In January the growth was evenly distributed between autos and light trucks, but we expect the market to start leaning toward lighter weight, more fuel-efficient autos in the coming months and years.
There are a couple of newly-emerging trends that bode well for North American moldmakers if they continue. The first is a trend toward more parts made of plastic or composite materials which results in vehicles that are lighter weight and less expensive to build. These factors will become increasingly important as the market moves towards vehicles powered by non-crude oil based fuels.
The second trend that will be positive for domestic mold shops is that the domestic automakers are taking market share away from imported models. All of the growth in the January sales data was due to a 14% increase in sales of domestic cars and light trucks. Total sales of imported cars and light trucks declined by 6% in January when compared with the same month a year ago. It is still way too early to tell if this trend will continue, but the Detroit 3 are aggressively redesigning and launching new models. Demand for new molds and tooling will accelerate if these efforts are successful.
There are a few one-time factors that will likely affect the data in the first half of 2013, so suppliers to the auto sector will need to monitor the market data closely in the coming months. The first is the recovery from Hurricane Sandy. This storm destroyed a lot of vehicles, both commercial and domestic, that will be replaced as the insurance and recovery assistance money starts to flow.
The second factor is the surge in personal incomes that occurred in December. Many companies accelerated their payments of bonuses and dividends before the end of 2012 in an effort to avoid higher taxes that were anticipated for 2013. This spike in the monthly income data may have resulted in strong January sales by pulling forward sales from future months.
Finally, the rise in payroll taxes that began at the first of this year will likely be a drag on car sales and consumer confidence for a few months as households adjust to smaller paychecks.
When all of these factors are combined, we still feel the net result will be a solid increase in demand for motor vehicles in 2013. By the end of this year, we expect the employment data to improve markedly, and this will be the catalyst for accelerating demand for new autos.