Steve Szakaly, chief economist for the National Automobile Dealers Association, predicted a downturn in car sales over the next five years, but said that’s not necessarily bad news for local television because auto dealers and OEMs often increase their advertising expenditures in order to lift sales during a downturn.
Car Sales To Slow, But May Not Harm Local TV
Fortunately for broadcast television, the median age of new-car buyers is 51.7 years-old, a group still reachable on broadcast TV.
But younger people — most notably millennials — present unique challenges for car marketers and, by extension, local television, because they’re more easily reached via digital and social media.
That was the word from Steve Szakaly, chief economist for the National Automobile Dealers Association, who presented the outlook for the automotive industry in a keynote address at the TVB Forward conference in New York today.
Szakaly noted the consistent growth in car sales that has been ongoing for seven consecutive years, but then predicted a downturn over the next five years — from a projected 17.7 million vehicles this year to 16.5 million in 2020.
This is not necessarily bad news for local television, he said, because auto dealers and OEMs (original equipment manufacturers) often increase their advertising expenditures in order to lift sales during a downturn. In his presentation, he offered no specific outlook or projections for the future of automotive ad expenditures in local television for the fourth quarter of this year and 2017.
He explained that car sales will soften because car prices are outpacing salaries. “Consumers are at the endpoint of their ability to finance ever-increasing prices,” Szakaly said. And car owners are keeping their cars longer, he said.
With that in mind, Szakaly said local dealerships might increase ad expenditures in support of their maintenance services and parts departments, presenting an opportunity for local TV.
Much of his presentation was devoted to the lifestyle characteristics of millennials and how they’re impacting the auto dealers’ marketing plans. “The dealerships are becoming more sophisticated about their digital advertising” to reach millennials, he said.
By contrast, the dealers are relying increasingly on the OEMs to make the expenditures in television advertising aimed at reaching older potential buyers.
See all of TVNewsCheck’s TVB forward coverage here.