It’s the economy, stupid


At TVB yesterday, David Wyss, chief economist at Standard & Poor’s, sketched an overview of where the economy is headed, followed by Paul Taylor, chief economist, National Automobile Dealers Association, who gave a focused look at the outlook for the automotive industry.

Wyss also underscored the “fasten your seatbelt” approach to the economic outlook and said the next president will really have a big issue on his or her hands in funding entitlement programs (on top of our existing problems) such as social security and health care costs. “Either make cuts or raise taxes,” he warned will be the necessity.

Taylor noted the peak auto sales volume was 17.3 million units in 2000. Only 15.7 million are expected this year. What’s selling best this year is crossover SUVs and very small cars.

While total dealership ad spend peaked in 2003, spend per new light vehicle sold peaked in 2007.

Taylor also noted that smaller dealers use less TV; larger ones use more. “This trend will continue as manufacturers will make dealerships larger in the next few years through consolidation plans. So the ad share will get larger.

The ad spend share has changed a lot in the last few years, as well. For example in 1997, TV was 15.7% of the pie. In 2007 it was 17.4%. However, in that same period newspaper ads went from 52% to 26.7%.