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BUSINESS FORECASTS FOR THE MOTOR TRADES TO 1990 INCLUDING PRICES AND RUNNING COSTS

The over-valuation of the US dollar and the huge US trade deficit point to a move towards protectionism in 1986 and a further slowing of world trade growth. Total US output is forecast to slow again in 1986 and then to expand more rapidly, helped by lower interest rates. In the meantime oil and commodity prices will continue to weaken. In the UK output growth is also slowing with weak exports and investment forecast for 1986 and total output growth of 2%. Unemployment will rise again this winter and interest rates are expected to decline. The budgets of 1986 and 1987 are forecast to be expansionary, with cuts in income tax and lower interest rates leading to a consumer-led recovery from 2nd half 1986, with large rises in consumer in spending 1987 and 1988. Consumer buying of new cars rose to a peak in 1983 whereas business buying rose to a peak in 1985. Interest rates changes are critical to the personal sector of the market and the next major upturn is forecast for 1986/87. Profits is the leading indicator for business buying and indicates a lower market in 1986/87 followed by an upturn in 1988/89, with total new car sales rising to 1.94 million in 1990, with a long-term growth rate of 2% annum. Commercial vehicle (cv) sales are forecast to weaken in 1986 and to peak again in 1989, reflecting the upturn in company profits. Competition from imports is expected to limit car price increases in the UK. The pound is forecast to weaken ahead of the next election, helping UK producers. Regulations for control of exhaust emissions will raise car prices more from 1989 and favour smaller cars. Diesel cvs will be subject to controls later in the 1990s. Fuel savings on the diesel car will average around 30% and diesel models are forecast to take 10% of new car sales by 1990. Running costs of diesel models are estimated to be at least 10% less than the petrol model. New car prices are forecast to rise faster than average prices up to 1990, averaging 5.3% per annum. The personal consumer market for used cars is the main factor influencing second hand car prices. Consumers' purchasing power and interest rates are the key factors. Residual values were relatively strong in 1983. Depreciation rates are expected to rise to a peak in 1985/86, falling to give a peak in residual values in 1987/88, and rising in 1989 to give a trough in residual values. The fluctuations in depreciation have declined because the ebbs and flows of private and business buying are tending to cancel out. The average rate of depreciation for cars continues at between 20 and 25%, with higher rates for cvs.

  • Corporate Authors:

    JAMES MORRELL ASSOCIATES

    1 PATERNOSTER ROW, ST PAUL'S
    London,   United Kingdom 
  • Authors:
    • Morrell, J
  • Publication Date: 1985

Language

  • English

Media Info

  • Pagination: 44 p.

Subject/Index Terms

Filing Info

  • Accession Number: 00487731
  • Record Type: Publication
  • Source Agency: Transport and Road Research Laboratory (TRRL)
  • Files: ITRD, TRIS
  • Created Date: Sep 30 1989 12:00AM