Automotive purchase trends for 2006

The online automotive information provider Edmunds.com has revealed the United States' most-researched new vehicles of 2005, while also publishing its automotive trends forecast for 2006.

The most-researched cars of 2005 were (in order, starting with the most researched): Honda Accord, Honda Civic, Acura TL, BMW 3 Series, Toyota Camry, Mazda 3, Infiniti G35, Toyota Corolla, Volkswagen Jetta, and finally Audi A4.

The most-researched minivans, SUVs and trucks were: Toyota Tacoma, Honda Odyssey, Honda Pilot, Honda CR-V, Toyota Highlander, Toyota Sienna, Toyota 4Runner, Ford F-150, Ford Escape, and Acura MDX.

Despite many recent new product introductions, the lists contain many vehicles that were also among the most researched in 2004. Newcomers to the 2005 list are the Volkswagen Jetta (redesigned for 2006), Audi A4 and Acura MDX. Those that left the top ten lists include the Lexus RX330 (now in 11th place), the Nissan Altima (now in 14th place), and the Chrysler 300 (now in 19th place).

2005 auto trends
According to Edmunds.com, there were three key trends that characterised the automotive market in 2005:

1. Record fuel prices changed consumers' vehicle interests
   Fuel prices soared in 2005, reaching a peak national average in the USA of US$3.057 per gallon for regular self-serve petrol, according to the American Automobile Association. As a result, many consumers researched and purchased more fuel-efficient vehicles and turned away from mid-size and large SUVs. Specifically:
   • Hybrid sales nearly tripled in 2005, earning 1.26% market share (compared to 0.48% in 2004).
   • Compact car market share increased from 15.9% in 2005 from 14.5% in 2004.
   • In the used car vehicle marketplace, average trade-in values for mid-size SUVs dropped by 8.3% and large SUV values fell by 13.7%, while average trade-in values for compact cars rose by 13.5%.
2. Import market share increased
   US domestic manufacturers have been losing ground to imports, particularly Japanese brands. Trends that Edmunds.com observed in 2005 included:
   • Domestic manufacturers' market share dropped 2.4% from 58.4% in 2004 to 57.0% in 2005. Import market share increased 3.4% from 41.6% in 2004 to 43.0%.
   • Of the major Japanese manufacturers, Toyota and Nissan enjoyed the most growth, with market share gains of 8.7% and 8.5% respectively.
   • Edmunds.com's web site traffic data revealed that eight out of the top ten makes researched were imports, with Honda and Toyota leading. The two domestic makes that made the list were Chevrolet and Ford, at number three and five respectively.
3. Popular marketing programmes increased consumer interest
   Employee pricing offers and slogans such as "Keep It Simple" were created to drive showroom traffic, and they worked. These programmes helped domestic manufacturers sell older inventory much quicker than in years past. Specifically:
   • Average incentives for 2005 were US$3,456 per domestic vehicle sold and US$1,109 per Japanese vehicle sold - a decrease of 4.1% and increase of 21.0% over 2004 respectively.
   • In 2005, GM led the domestic incentives war with average incentives of US$3,623 per vehicle sold, while Ford spent US$3,148 and Chrysler spent US$3,510 per vehicle sold.
   • Nissan spent an average of US$1,769 per vehicle sold, while Toyota spent US$961 and Honda spent US$646 per vehicle sold.

   Imported brands have increased their incentive spending over time, while domestic manufacturers have been decreasing incentive spending.

Forecast for 2006
Edmunds.com expects sales to be relatively flat, with light vehicle sales once again totalling 16.9 million. Although domestic makes are expected to continue to lose market share, their many new products will help keep consumers interested. For example, GM has already introduced the Pontiac Solstice, which helped redefine the company's image and was named Edmunds.com's Most Significant Vehicle for the year. With the upcoming introduction of new vehicles based on the GMT 900 platform, GM is expected to regain lost share in the remarkably profitable large truck and large SUV segments. In addition, the new Ford Fusion and the continuing success of the Chrysler 300 are among other bright spots in the domestic automakers' future.

Other trends for 2006
Other trends that Edmunds.com foresees for 2006 include:

• Steady or increasing demand for compact cars - even with fuel prices stabilising - and also for luxury vehicles.
   
• The rapid sales growth of hybrids - as much as doubling their market share.
   
• The Japanese Big Three (Honda, Nissan and Toyota) continuing to capture market share from domestic manufacturers.
   
• A greater volume of off-lease vehicles entering the marketplace, increasing used vehicle inventories and driving their prices down. This will also stimulate certified pre-owned sales, as off-lease vehicles are the primary source of certifiable cars and trucks.
   
• New sub-compact models from Japanese makers, including the Honda Fit, Nissan Versa and Toyota Yaris, finding their niche in the US marketplace.

Jesse Toprak, executive director of industry analysis for Edmunds.com, concluded: "This year has seen the rebirth of the car, as we saw a two percent increase in that segment's market share, while SUV market share decreased by nearly the same percentage. We expect this trend to continue in 2006 as manufacturers will be launching new hybrids, subcompacts and other fuel-efficient products."