The National Automobile Dealers Association’s (NADA) recently released forecast for 2015 covers several areas that impact the car wash industry. To a large extent, NADA’s assessment of what 2015 might bring echoes that of our own Executive Forecast panel, whose insights appear in December 2014 issue. On the whole, that outlook is positive, which is further reflected in the results of our State of the Industry Survey.
Car washers look to new-car sales as a barometer of their own industry’s health. In this regard, NADA’s views are encouraging. First, the association expects 2014 to close out with dealers having moved 16.4 million new cars and light trucks out of their showrooms. For 2015, the forecast calls for sales to reach 16.94 million units. NADA’s chief economist, Steven Szakaly, holds out the prospect of sales topping the 17 million mark, but cautions that this will require stepped-up incentives and greater penetration of the millennial demographic. We’ve come a long way since, say, 2009 when sales figures failed to reach 11 million.
That there is a correlation between gas prices and wash volumes is pretty well established. Here, too, NADA provides cause for optimism. Oil and gas prices are expected to remain low through 2015. The association is quite specific in its assessment, forecasting an average of $71 to $73 a barrel for West Texas Intermediate crude during the first six months of 2015 and $83 a barrel for the six months thereafter. There’s a kicker: If prices remain this low, Szakaly, theorizes, consumers could snap up light vehicles in even greater numbers during the second half of 2015.
On the employment front, the association sees sustained growth through 2015, with disposable income increasing by 2.5 percent. While consumers with extra cash in their pockets are welcome prospects for car washers, a smaller — and more expensive — labor pool spells difficulties for wash locations that offer labor-intensive services.
Corporate profits, NADA says, will rise by 6.7 percent. Interest rates are expected to remain low, although the association foresees a small increase during the course of 2015. Rates on auto loans will rise by between 125 and 150 basis points but, NADA predicts, this will not “dampen” its sales outlook.
The results of our State of the Industry Survey show that vendors to the car wash industry are likewise expecting positive developments in 2015. Compared to 79 percent last year, 82 percent, overall, of current-survey respondents predict sales growth next year, though they have moderated the scale of the expected growth from 16 percent last year to 13 percent this year. Only 4 percent anticipate a decline in sales. Last year that figure stood at 8 percent. As was the case in the previous survey, equipment manufacturers are unanimous in forecasting increased sales in the New Year, though they, too, curbed their enthusiasm somewhat, predicting a more cautious 12 percent growth as opposed the 14 percent advance they foresaw last year. Ninety two percent of chemical manufacturers (88 percent last year) see sales growth in 2015 at an average rate of 14 percent (12 percent last year).
If this happy package of expectation and foresight could be wrapped, it would deserve space in every car washer’s stocking. Since it cannot, may it at the very least help start off the Holiday season on a joyful note, and may the good cheer endure throughout the New Year.