Transcript FTA Revenue Estimating Conference Nashville, Tennessee

Motor Vehicle Outlook
Motor Vehicle Outlook
FTA Revenue Estimating Conference
Waterville Valley, New Hampshire
September 25, 2000
Mark Haas, Director
Jeffrey Guilfoyle, Economist
Office of Revenue and Tax Analysis
Department of Treasury
State of Michigan
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U. S. Automotive Outlook
•
•
•
•
What Affects Auto Purchases
Changing Auto Market
Shares of Production
U. S. Automotive Outlook
22
Factors Affecting Auto Sales
Ability to Buy
1999
2000
Disposable Income
Green
Green
Vehicle Prices
Green
Green
Interest Rates
Green
Green
Affordability
Green
Green
Debt
Yellow
Yellow
33
Change in Per Capita Income
Real Disposable Income Growth
6.0%
3.0%
0.0%
-3.0%
1970
1980
Source: U.S. Bureau of Economic Analysis
1990
1999
44
New Domestic Car Prices Stable
Import
30
Thousands of Dollars
$30,347
(-5.1%)
20
Domestic
10
$18,724
(0.8%)
0
1970
1980
1990
Sources: AAMA & Automotive News, Market Data Book 2000
1999
55
Average Vehicle Finance Rate
Low Interest Rates Help Sales
20%
17.78%
15%
10%
7.84%
5%
0%
1973:I
1978:I
Source: Comerica Bank
1983:I
1988:I
1993:I
2000:II
66
Weeks of Income
Best Affordability Since 1980
30
25
24.4 weeks in 1999
23.1 weeks 1st half 2000
22.9 weeks in 1979
20
1979
1982
1985
1988
Source: Comerica Bank Economics Department
1991
1994
1997
2000
77
Consumer Debt Payments
Percent of Disposable Personal Income
Installment, Mortgage & Auto Leases
16
14.8%
15
14
13
12
11
1983
1987
1991
Source: Michigan Department of Treasury
1995
2000
88
Factors Affecting Auto Sales
Willingness to Buy
1999
2000
Consumer Attitudes
Green
Green
Age of Vehicle
Green
Yellow
Demographics & Tastes
Green
Green
Oil Prices
Yellow
Yellow
Stock Market
Green
Yellow
99
Consumer Car Buying Attitudes
Index: Good - Bad + 100
158
144
140
110
80
50
1973:I
1978:I
1983:I
1988:I
1993:I
Source: University of Michigan, Survey Research Center, July 2000
2000:II
10
10
Vehicle Age Declining
U.S. Lt. Vehicle Age
9
1999 Median for Cars 8.3 years
8
7
1999 Median for Trucks 7.2 years
6
5
1989
1994
Source: Automotive News, 1999 Market Data Book
1999
11
11
Vehicles Per Household
1.90
2
1.81
1.5
1.22
1
0.5
0
1960
1970
1980
1990
2000
12
12
Oil Prices Rising
$40
Dollars Per Barrel
$35.24
$30
$27.10
$20
$10
$0
1973
1978
1983
1988
1993
Source: Monthly Energy Review, Standard and Poor’s DRI
2000:Q2
13
13
Net Imports as % of U.S. Supplies
More Dependent on Petroleum Imports
Total 56.6%
60
50
40
All-OPEC
30
20
Persian Gulf
10
0
1975
1980
1985
Source: Monthly Energy Review
1990
1995
1999
14
14
Stock Market Growth Slows
1800
S&P 500 Index
1518
1200
600
0
Jan-90
Jan-93
Jan-96
Jan-99
Aug-00
15
15
Demand For Motor Vehicles
•
•
•
•
Trend
Wealth Effect
Economic Conditions
Price Incentives
16
16
Vehicle Sales Trend
Sales
Millions of Units
16
Trend
8
0
1960
1970
1980
Source: Michigan Department of Treasury
1990
2000
17
17
Motor Vehicle Production
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•
•
•
Capacity Utilization
Worker Bonuses
Occupational Mix Changing
Improved Vehicle Production
Management
• Improved Vehicle Demand
Management
18
18
1999 Production and Capacity
Millions of Vehicles
North America
9.027
8.877
8.302
111%
7.996
92%
Cars
Trucks
Production
Source: Automotive News, 2000 Market Data Book
Capacity
19
19
Big 3 Profit Sharing Checks
Average Per Autoworker
$10,000
Daimler Chrysler $8,100
$7,500
Ford $8,000
$5,000
GM $1,775
$2,500
$0
1995
1996
1997
Source: Ward’s Automotive Reports
1998
1999
2000
20
20
Share of Professional Jobs
Occupation Mix Shifts in
Michigan’s Vehicle Industry
21.8%
21
19
17
15
1983
1987
1991
Source: Bureau of Labor Statistics & Economy.Com
1995
1999
21
21
Inventory to Sales Ratio
Improved Vehicle Production Management
1.1
0.9
0.7
0.52
0.5
1960
1970
Source: Bureau of the Census
1980
1990
2000
22
22
Leasing Share of Financing
Improved Vehicle Demand Management
40
35.7%
30
20
25.2%
10
0
1986
1988
1990
1992
1994
1996
Source: Ward’s Automotive Reports, Economy.Com, WEFA
1998
'00Q1
23
23
2000 Forecast Accuracy
Aug 1999
Sept
Forecast Update
WEFA Group
15.4
17.2
Standard & Poor’s
DRI
Univ. of Michigan
15.7
17.5
16.0
17.2
Blue Chip
15.3
16.7
24
24
Light Vehicle Forecasts
2001
2002
WEFA Group
15.9
16.0
Standard & Poor’s
DRI
Univ. of Michigan
16.6
17.0
16.1
15.8
Blue Chip
16.0
N/A
25
25
U. S. Motor Vehicle Outlook
Car and Light Truck Sales Forecast
Forecast
17.2
16.8
Millions
16.1
15.8
15.4
15.0
15.1
1996
1997
1998
1999
Source: University of Michigan, RSQE, August 2000
2000
2001
2002
26
26
U. S. Motor Vehicle Outlook
Car Sales Forecast
8.3
8.1
1997
1998
Forecast
8.3
8.1
Millions
8.5
8.9
8.7
1996
1999
2000
Source: University of Michigan, RSQE, August 2000
2001
2002
27
27
U. S. Motor Vehicle Outlook
Light Truck Sales Forecast
Millions
Forecast
6.5
6.8
1996
1997
8.1
8.3
1999
2000
7.3
1998
Source: University of Michigan, RSQE, August 2000
7.8
7.7
2001
2002
28
28
U. S. Motor Vehicle Outlook
Summary
•
•
•
•
•
Record Level Sales
Vehicle Mix Continues to Shift
Income and Affordability Key to Sales
Near Capacity Production
Oil Prices and Stock Market Uncertain
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Motor Vehicle Outlook
Motor Vehicle Outlook
FTA Revenue Estimating Conference
Waterville Valley, New Hampshire
September 25, 2000
Mark Haas, Director
Jeffrey Guilfoyle, Economist
Office of Revenue and Tax Analysis
Department of Treasury
State of Michigan
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