Motor Vehicle Outlook - Tax Admin

[Pages:6]Motor Vehicle Outlook

FTA Revenue Estimating Conference

September 30, 2002

Mark Haas, Director Andrew Lockwood, Economist Office of Revenue and Tax Analysis

Department of Treasury State of Michigan

U.S Auto Industry in Perspective

? U.S. Auto Related Employment 6.6 million (4.9% of Total)

? U.S. Auto Related Compensation $243 billion (5.6% of total)

? Zero Percent Financing Lowered U.S. Unemployment Rate 1 Percent

? 7.5 Jobs Created for Each Autoworker's Job

1

Michigan

Millions of Units

U.S. Vehicle Sales Trend

Sales 16

Trend 8

0 1960

1970

1980

Source: Michigan Department of Treasury

1990

2000 2004

2

Michigan

1

millions of units

Michigan

U.S. Car & Light Truck Sales

10 9 8 7 6 5 4 3 1990

Cars= 8.655 million Trucks = 8.522 million

1995

2001

Source: Automotive News, Market Data Book 2002

3

2001 Vehicle Market Segments

Van 9%

SUV 22%

Small Car 11%

Midsize Car 27%

Pickup 19%

Large Car

Sporty 3 %

Michigan

Luxury

3% 6%

4

2

U. S. Automotive Outlook

? Ability to Buy ? Willingness to Buy ? Sales Trend ? Sales Outlook ? Production Outlook

5

Michigan

Factors Affecting Auto Sales

Ability to Buy

Disposable Income Vehicle Prices Interest Rates Affordability Household Debt

2002 Red Green Green Green Red

2003 Red Yellow Green Green Red

6

Michigan

3

Real Disposable Income Growth

6.0%

Forecast

Change in Per Capita Income

3.0%

1.4%

0.0%

-3.0% 1970

1977

1984

1991

1998

2004

Source: U.S. Bureau of Economic Analysis, RSQE August 2002

7

Michigan

Thousands of Dollars

Sticker Prices Remain Strong

Import

30

$27,477

(-1.0%)

20

10

0 1970

1980

1990

Domestic $19,654 (4.0%)

2001

Sources: AAMA & Automotive News, Market Data Book 2002

8

Michigan

4

Real Vehicle Prices Lower

New Car and Truck CPI

160

150

1982-84=100

140

130

120 1992

1997

Source: U.S. Bureau of Labor Statistics

Truck = 147.0

Car = 136.6

2002

9

Michigan

Average Vehicle Finance Rate

Low Interest Rates Help Sales

20% 17.78%

15%

10% 6.41%

5%

0% 1973 1977 1981 1985 1989 1993 1997 2002

Source: Comerica Bank Economics Department

10

Michigan

5

Weeks of Income

Vehicles More Affordable

30

25

21.4 weeks in 2001 20.9 weeks 1st half 2002 20

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Source: Comerica Bank Economics Department

11

Michigan

Percent of Disposable Personal Income

Consumer Debt Payments

Installment, Mortgage & Auto Leases

16 15 14 13 12 11

1983

1989

1995

14.8% 2001

Source: Michigan Department of Treasury

12

Michigan

6

Factors Affecting Auto Sales

Willingness to Buy

Consumer Attitudes Unemployment Claims Age of Vehicle Oil Prices Stock Market

2002 Green Yellow Yellow Yellow Red

2003 Yellow Yellow Yellow Green Yellow

Source: Michigan Department of Treasury

13

Michigan

Index: Good - Bad + 100

Consumer Car Buying Attitudes

140

110 80 50

1973

1979

158

1985

1991

1997

157 2002

Source: University of Michigan, Survey Research Center, September 2002

14

Michigan

7

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