Featured Stories

Other Pamplin Media Group sites


Car sales boom as Auto Show nears

Share

Buyers flock to buy new cars as fuel prices, interest rates stay low — which makes car dealers happy


PORTLAND TRIBUNE: JOHN M. VINCENT - Despite low fuel prices, manufacturers are still chasing higher and higher government mileage requirements. The Toyota Prius is all-new for 2016 with a unique look on the traditional hatchback silhouette. It's rated at 54 mpg in the city, with an Eco model available rated at up to 58 mpg/city.

If you see flashes of white as you pass your local auto dealerships, they may just be the smiles on the staff’s faces.

Car sales are booming, setting an all-time sales record for 2015 that may be stretched even higher in 2016.

Total U.S. auto sales in 2015 exceeded 17.5 million units, and some predict that 2016’s market could reach 18 million. Low fuel prices and interest rates are encouraging Americans to buy new, larger, and often less efficient vehicles than they did when fuel prices were higher. Automakers still need to sell the super-efficient models, though, making many of them excellent bargains.

Visitors to the Portland International Auto Show at the Oregon Convention Center may find fewer brands than they used to, but those brands that have survived are stronger and are producing more models than ever.

In the past dozen years, we’ve lost Plymouth, Mercury, Pontiac, Saturn, Hummer, Isuzu and Oldsmobile from the American market.

In that same time, we’ve seen new companies start, and maybe one day a company such as Tesla, Google or Apple will compete with a full-line of cars, like GM or Ford. In just the past month, a new marquee has entered the market, as Hyundai created the Genesis brand to market its forthcoming luxury vehicles.

Several factors are driving the market, though any blips in the economic recovery would likely be quickly reflected in automotive sales. Fuel prices continue to decline, with the U.S. average below $2 per gallon for the first time since 2009, according to the US Energy Information Agency. Oregon’s prices tend to trend higher due to factors that include our distance from oil production and refinery facilities.

The cheaper gas prices have led to increased sales of SUVs and pickups — relatively pricey, yet inefficient vehicles. However, auto manufacturers are still required to pursue ever-increasing corporate average fuel economy (CAFE) standards. That’s why even trucks and SUVs are becoming more efficient, using hybrid powertrains, for example. Toyota’s 2016 RAV4 Hybrid compact SUV achieves an EPA estimated 34 mpg in the city.

Pickup trucks, which in recent years have become larger and more luxurious than ever, are embracing diesel engines and high-tech, lightweight materials to help increase efficiency.

Ford startled the industry in with its top-selling 2015 F-150 pickup redesign featuring lightweight aluminum construction to increase efficiency. For 2017, the company’s using the material for its heavier and more capable Super Duty pickups. A 2017 Ford Super Duty is expected to be shown at the Portland Auto Show.

Chevrolet took Motor Trend’s coveted 'Truck of the Year' honors with its midsize Colorado Diesel pickup that touts up to 31 mpg on the highway. Its sister vehicle, the GMC Canyon Diesel, is expected at the show.

The ever-higher mileage standards also account for a high number of new alternative-fuel vehicle entries to the market. There’s a new, higher mileage Toyota Prius for 2016, and plug-in hybrids from a number of manufacturers, from Hyundai to Mercedes-Benz. Chrysler is scheduled to show its revolutionary plug-in hybrid 2017 Pacifica minivan at the show.

Low rates, more demand

Auto loan interest rates have remained low for several years, but may be ready to increase later in the year. Although the government’s benchmark interest rate has increased slightly, consumer interest rates will follow in their own time, tempered by market conditions and competition amongst lenders.

Due to market demand, there is less manufacturer-subsidized lending available, so buyers shouldn’t expect to find the amount of extra-low or zero percent financing as they could just a year ago. Older and slower-selling models are more likely than newer, popular vehicles to be available with the subsidized interest rates.

Due to higher vehicle values and transaction prices, the length of loan terms continues to increase, allowing buyers and lenders to manage the affordability of monthly payments. A long-range risk to the auto market is that the longer-term buyers will build equity in their vehicles at a slower rate, lengthening the time before they are able to purchase their next car.

During the economic downturn, the age of vehicles on the American road rose to new records, as new vehicle purchases were, in many cases, deferred due to family and company finances. With the recovery, filling that pent-up demand continues to help drive sales.

"As long as we have tracked average age, it has gradually risen over time due to the increasing quality of automobiles," said Mark Seng, global aftermarket practice leader at IHS Automotive. "For the five to six years following the recession, however, average age increased about five times its traditional rate, which we attribute to the nearly 40 percent drop in new vehicle sales in 2008-2009.”

According to IHS Automotive, the average had climbed to a record 11.5 years as of January 2015, while returning to a more gradual rate of increase.

2016 Portland International Auto Show

Dates: Jan. 28-31

Times: Thursday through Saturday 10 a.m. – 10 p.m., Sunday 10 a.m. – 7 p.m. Ride and Drive program hours vary.

Charity Sneak Peek: Jan. 27

Sneak peek tickets: $100, tax deductible, available at PortlandAutoShow.com

Location: Oregon Convention Center, 777 NE Martin Luther King Jr. Blvd., Portland

Admission: Adults 13 and over, $12. Seniors and military with ID, $10. Children ages 7 to 12, $7. Age 6 and under, free. Group and family ticket packages available online at PortlandAutoShow.com.

Parking: Admission prices do not include Oregon Convention Center parking.

Transit: The Oregon Convention Center is served by TriMet MAX light rail and the Portland Streetcar.

Website: PortlandAutoShow.com

Produced by: Metro Portland New Car Dealers Association

John Vincent can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. or @OregonsCarGuy on Twitter.