Forecast: The six-year boom in new car sales will end in this year

For six years now, auto sales have been booming, and auto advertising right along with them. But that’s unlikely to continue. A new automotive forecast from Borrell Associates, the Williamsburg, Virginia, ad tracking firm, projects a slowdown in both auto sales and auto spending starting next year. There are many factors playing into the slowdown, including a reduction in the number of dealerships and a renewed interest in used cars. Kip Cassino, executive vice president at Borrell, and Corey Elliott, vice president of research, talk to Media Life about why they’re projecting the slowdown, how dealer and dealer association goals differ, and what trends media buyers and planners should be watching in the industry.

What’s the most important thing for media buyers and planners to know about the auto industry now?

Cassino: Auto sales have reached their highest level of this century, but industry observers believe a contraction is coming — perhaps as early as next year.

Elliott: What does that mean they should DO? Nothing different from what they should always be doing: Know the consumer and maximize return on investment.

It’s HOW they do that that’s important. Realizing auto advertisers are cutting “non-performing” media is a different way of viewing ROI. Read all the studies possible about how people go and buy cars.

How does a 28-year-old go about buying a car versus a 68-year-old? Which is more valuable to a dealer? How do you set up a media path that leads them through the transaction into advocacy?

Nothing earth-shatteringly new here, but realize if they do not take initiative, dealers are starting to do it for them.

Why do you think the new car sales boom is coming to an end?

Elliott: Lots of little reasons…

Cassino: Promotional spending – rebates and discounts – have reached very high levels. Buyers who ordinarily would have waited to buy are lured to purchase early. Future demand is being artificially reduced.

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Media Life Magazine