ECONOMY: BEST GROWTH OF 2012
Economic growth in the first quarter was 2.2% as strong consumer spending was to some extent offset by declines in government spending and business investment.
Some of the weakness in business investment was probably related to payback from spending moved into 2011 to take advantage of the temporary 100% depreciation for new capital expenditures. However, a sharp decline in spending on business structures was surprising and probably will not repeat going forward.
We expect that growth will accelerate as business investment picks up and government spending declines moderate.
NEW VEHICLE SALES: SALES ACCELERATE
Light vehicle in the first quarter were up 12% to 14.5 million at a seasonally adjusted annual rate, the highest level in four years. While some of this strength may have been related to unseasonably warm weather, much of it was due to a combination of an improving economy, better credit conditions, attractive fuel efficient models, and a great deal of pent-up demand. Continuation of these conditions is expected to produce total year sales of about 14.5 million units this year and over 15 million next year.
USED VEHICLE SALES: SALES CONTINUE STRONG
Used retail car sales have followed new sales up with a year/year increase of 9.4% in the first quarter.
We expect used retail sales gains to moderate and are looking for about a 4% increase this year to over 40 million and a 5% increase in 2013 to over 42 million.
AUCTION VOLUME: VOLUME IMPROVES
Auction volume continued to improve in the first quarter, only declining about 1% after a decline of 2.9% in the previous quarter (see table on next page). These small declines compare to an average 8.5% quarterly decline in the first three quarters of 2011.
As the year goes on, we expect volume to firm and are looking for a slight increase in 2012.
REGIONS:
In the first quarter weakness continued in the Far West and North Central, while volume in the rest of the nation was flat to slightly up.
TYPE:
First quarter dealer consignment continued strong while the drag from fleet/lease and factory was less than in 2011.
This year, higher dealer consignment volume associated with better new sales will continue adding to total auction volume. As the negative impact of weak new sales in 2008 and 2009 lessens, total auction volume is expected to stabilize and then increase during the second half.
SEGMENT:
In the first quarter pickup and van volume was Passenger cars and the utility segment that now combines CUVs and SUVs performed relatively well in the quarter,
AUCTION PRICE: FLAT
First quarter average auction prices continued about flat with last year.
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