Increased purchase intent and the gradual improvement in consumer confidence over the last few months are likely to add more fuel to the already sizzling fire of new vehicle sales performance, according to the latest reading of the TechnoMetrica Auto Demand Index.
In January, the ADI grew by six points to a reading of 88, an increase of 7.3% from last month’s score of 82. Therefore, at least in the near term, we should expect auto sales to continue the robust growth that they had exhibited in much of 2013.
TechnoMetrica Market Intelligence developed the Auto Demand Index, a nation-wide survey of American adults conducted every month, as a means to measure the purchase intent of consumers regarding their likelihood of buying or leasing a new vehicle within the next six months. We compute the Auto Demand Index based on responses to the question: How likely is it that you will buy or lease a new vehicle within the next 6 months?
January’s Index level was the highest score recorded since September 2012, when the ADI was also registered at 88. Furthermore, the Auto Demand Index this month is nine points above the 12-month average of 79. The improvement in purchase intent can be attributed to such factors as car companies offering exciting new models, and the continual rise in the average age of vehicles that American consumers currently drive.
The share of likely buyers grew by one percentage point this month, to 15%.
Although consumer confidence and purchase intent have been gradually improving of late, Americans remain somewhat pessimistic about economic conditions in the country. January marked the fifteenth straight month that the IBD/TIPP Economic Optimism Index, a monthly analysis of consumer confidence conducted by TechnoMetrica, registered a reading in negative territory (below the neutral level of 50), with a score of 45.2.
“Our latest survey shows that auto sales will continue their robust growth in the coming months, despite some persistent consumer pessimism,” says Tom Westervelt, an auto analyst with TechnoMetrica Market Intelligence. “Consumers are still willing to plunge into buying new vehicles, even if they feel that economic conditions are unstable.”
The Auto Demand Index survey also inquires into the vehicle brand preferences of likely buyers. Ford continues its reign as the brand consumers would be most likely to purchase, with a share of 19% this month. Second place Toyota was chosen by 15% of likely buyers, an increase of two percentage points from December’s reading, while Honda remains unchanged from the previous month, with a share of 10%. Chevrolet (9%) and Nissan (6%) rounded out the top five brands.
Regarding the type of vehicle consumers would be likely to purchase, mid-size vehicles hold a commanding lead as their top preference, at 35%, which is an improvement of four points from last month. Full-size (15%) and compact (14%) cars came in second and third respectively, though both shares declined by two percentage points from December.
In terms of demographics, as was the case last month, consumers who have household incomes greater than $100,000 experienced the greatest increase in intention to acquire a new vehicle, surging 20 points from December to a score of 142. Car owners of the West, as well as African American and Hispanic consumers, also saw steep growth in purchase intent. On the other hand, the 18-24 year old demographic experienced the greatest decline over the past three months.
Each month, TechnoMetrica uses Random Digit Dial telephone methodology to conduct live interviews with more than 900 respondents, using both landlines and cell phones. The margin of error for the survey is +/- 3.3 percentage points. Additionally, recent statistical analysis has shown a strong correlation between the Auto Demand Index and actual U.S. vehicle sales. The correlation is 0.76.
About TechnoMetrica Market Intelligence:
TechnoMetrica Market Intelligence Inc. is a progressive full-service research firm established in 1992. The firm, headquartered in Ramsey, New Jersey provides both quantitative and qualitative solutions to the business and government markets. TechnoMetrica has been providing innovative research solutions to many of the world’s most respected automotive brands for over a decade. In partnership with Investor’s Business Daily, TechnoMetrica conducts IBD/TIPP polls, including the nationally-recognized IBD/TIPP Economic Optimism Index. IBD/TIPP was the most accurate pollster in the 2008 and 2004 presidential elections, according to final FEC-certified results of those elections. TIPP is also the polling partner of The Christian Science Monitor and the Monitor/TIPP polls regularly appear in the paper.
Note to Editors:
Users of these statistics should attribute credit and source to TechnoMetrica as this research is proprietary. To review the entire TIPP Auto Demand Index for 2013, visit: http://www.tipponline.com