Study: Record Number of Fresh Products Coming to Dealer Showrooms | Edmunds

Study: Record Number of Fresh Products Coming to Dealer Showrooms


Just the Facts:
  • A new study by auto analysts at Bank of America Merrill Lynch says car shoppers can expect to see a record number of new models in dealer showrooms in the coming four-year 2015-'18 period.
  • The new-model replacement rate in that time frame will reach or surpass an average of 21 percent, meaning about one in five vehicles, on average, will be new or significantly refreshed.
  • Despite all those new models vying for car shoppers' attention, however, the report's chief analyst says buyers shouldn't expect much of an increase in incentives or other forms of price reduction compared to today's levels.

DETROIT A new study from auto analysts at Bank of America Merrill Lynch presents good news for those planning on shopping for a new vehicle in the next several years: Automakers are expected to stuff dealer showrooms with a record number of new models.

The study, which BofA analysts have produced annually since 1991 but for the first time is being made public, projects that automakers will replace about 21 percent of their total model lineups, on average, every year from 2015-'18, said the report's chief analyst John Murphy in a meeting with the Automotive Press Association.

That compares with an industry-average replacement rate of about 16 percent since 1994, Murphy added. And at the moment, auto companies also are "churning" new products — introducing all-new models and launching new generations or meaningfully refreshed versions of existing models — on cycles of about 2.1 years, the study said. But Murphy believes that rate will slow slightly to a more sustainable industry average of about 2.5 years.

Although new-model replacement is expected reach new highs in the next four years, Murphy doesn't expect that to translate to a price bonanza in showrooms as all these new vehicles compete for the attention of car shoppers. He said large buyer incentives usually are the result of car companies trying to improve their market share — and the "market-share shifts of the last few decades are largely over."

Murphy added that the other reason automakers resort to deep incentives — producing too many cars — also has largely been eradicated as car companies, particularly the Detroit-based General Motors, Ford and Fiat-Chrysler, have right-sized their manufacturing capacity to much more closely match customer demand for their products. Murphy said in the 2015-'18 time frame of the "Car Wars" study, auto companies have "no motivation" to resort to price cutting beyond current levels.

The study projects that Ford showrooms will be the busiest in terms of new-product replacement in the 2015-'18 period, with the company replacing 111 percent of its models. The BofA report says to expect lower-than-average replacement &mdash resulting, presumably, in comparatively fewer new models for you to look at &mdash in showrooms of GM, Nissan and Toyota.

What new models are expected to be hot properties in the next couple of years? Murphy points to Honda's 2015 HR-V, coming this fall, as a model with potential to spark wider interest in the subcompact crossover segment that currently has just a few players such as the Nissan Juke and Buick Encore.

Ford's all-new, aluminum-intensive 2015 F-150 also could emerge as a game-changer, Murphy said, noting that if the F-150 makes the impact with pickup buyers many expect thanks to the promise of significantly improved fuel economy, it could signal a revival in buyer consideration for full-size pickups and other large models.

Edmunds says: The most new-model replacements in the past 20 years? Bring 'em on.

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