Private Jet Market Hits Deflationary Turbulence

Originally published by Bloomberg on October 9, 2017 Read the original article.

In a section titled “Deflationary Psychology Climbs Into the Driver’s Seat,” EWI’s August 2017 Financial Forecast notes:

According to Automotive News, year-over-year new car sales fell 4.7% in April, 0.5% in May and 2.9% in June. After seven consecutive years of rising demand, U.S. light-vehicle sales are now down 2.1% for the year. On July 1, Automotive News also cites inventories of 4.2 million vehicles, the highest total in 13 years. According to a study by AlixPartners, this is likely only the beginning of a darkening period for U.S. auto sales. From record highs in 2016, the firm predicts that sales will decline 13% from 2017 through 2019, from 17.5 million to 15.2 million vehicles. Moreover, sales incentives have averaged 10% of vehicle prices over the past 11 months, “a historical harbinger of downturns.”

So, EWI hasn’t been surprised by a downward development in the private jet market. You might say that a deflationary psychology appears to be climbing into the pilot’s seat.

Read this excerpt from an Oct. 9 Bloomberg article:

Corporate-jet makers are flooding the market, spurring deep discounts for new aircraft and fueling a three-year slide in prices of used planes.

Most major manufacturers, including Gulfstream and Bombardier Inc. — which is also contending with rising hurdles in its commercial-jet business — have pared production somewhat in the last couple years as demand for private jets has sagged.

The jet glut is one reason pre-owned prices were down 16 percent in August from a year earlier. With bargains aplenty on machines with few flight hours, manufacturers are cutting deals to entice buyers to purchase new planes. …

A rise in demand for new company planes, which would help stabilize the market, isn’t in the cards. Corporate plane-buying plans have hit a 17-year low, according to an annual survey by Honeywell International Inc. of more than 1,500 flight departments.

You can read the entire article by following the link below:

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