This Week in Car Buying: Sales rev; Chevy Volt incentives; U.S. drivers cover 3.1 trillion miles; Allstate worries about driverless cars
Recovering from a drop in sales as a result of the massive winter storm that blanketed a portion of the East Coast, the auto market is on track to post its best February in 16 years, according to Kelley Blue Book estimates. KBB data indicates sales are expected to increase 9 percent over last year for a Seasonally Adjusted Sales Rate (SAAR) of 17.9 million units compared to a 16.4 million rate in February 2015. The previous record, in 2000, has a SAAR of 18.9 million.
Helping to push up sales are greater use of longer-term loans and leasing, which J.D. Power estimates will account for a 65.1 percent of all sales, a record level. Rising transaction prices also are boosting the value of those purchases to more than $32 billion, up $3 billion from a year earlier.
Low fuel prices are having a large impact on the composition of the market with car sales dipping to just 42 percent of the total, according to the research firm. Regular gas is currently selling for about $1.71 per gallon on average according to AAA. Also helping to push sales higher was increased incentive spending by manufacturers across the board.
“February 2016 numbers should reveal solid growth and continued momentum in the auto industry,” said Alec Gutierrez, senior analyst for Kelley Blue Book. “Economic indicators remain positive for the industry, with the unemployment rate down below 5 percent, average home prices on the rise and gas prices averaging under $2 per gallon. However, increased incentives also are helping consumers close deals, as in recent months incentive spend has approached pre-recession levels.”
Chevy Volt incentives revealed
According to the Detroit Free Press, Chevrolet is offering $1,000 cash and other incentives on the 2016 Volt in 11 states, citing data from the CarsDirect website. The incentive program comes just after the Volt has been extensively redesigned with an upgraded powertrain and a new look inside and out.
The states cited include California, Oregon, New York, New Jersey, Connecticut, Massachusetts, Vermont, New Hampshire, Maine, Rhode Island and Maryland. The incentives are being extended in states that follow California’s Zero Emission Vehicle rules. Chevrolet is keen on pushing the plug-in hybrid to meet quotas for these vehicles in order to generate enough credits to keep selling their full-line of products in these key markets.
U.S. drivers cover 3.1 trillion miles
The Department of Transportation reported that U.S. drivers travelled more than 3.1 trillion miles in 2015, a new record distance and the largest since the previous record of 3.03 trillion miles in 2007.
“The new figures confirm the trends identified in ‘Beyond Traffic’, a USDOT report issued last year, which projects a 43-percent increase in commercial truck shipments and population growth of 70 million by 2045,” the agency said. “So, even though we have seen indications that individuals might be driving fewer miles per person, an increasing population with increasing freight demands still leads to more and more total miles travelled and more challenges on the road ahead. Our current infrastructure has ever increasing demands on it, and investments are needed in both the short and long term. Increased gridlock nationwide can be expected unless these investments are made.”
This monitoring of the distance travelled becomes more relevant as state agencies look at a way to tax motorists on distance travelled rather than relying on fuel taxes to pay for infrastructure improvements. Government agencies have seen a drop in revenue as overall fuel economy increases and new vehicles like EVs avoid gas taxes entirely.
Allstate autonomous worries
Insurance giant Allstate has raised concerns that autonomous automobiles could put a crimp in their business, according to a report in the Chicago Tribune. The company’s 2015 annual report raised two concerns regarding self-driving cars, the first that the telematics used to control these vehicles might be vulnerable to hacking and second, autonomous shared cars may decrease demand for insurance.
“Telematics devices used have been identified as potential means for an unauthorized person to connect with a vehicle’s computer system resulting in theft or damage, which could affect our ability to successfully use these technologies,” Allstate said in its report. “Other potential technological changes, such as driverless cars or technologies that facilitate ride or home sharing, could disrupt the demand for our products from current customers, create coverage issues or impact the frequency or severity of losses and we may not be able to respond effectively.”
There are some who also posit that insurance could become irrelevant in an autonomous automobile environment in which there are virtually no accidents. However, Allstate CEO Tom Wilson believes that the company can face these challenges and that overall “we support the introduction of new driver-assistance technology safer, because this is about saving lives.”
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