Edmunds.com
Pent-up demand has been a powerful driver of U.S. car sales. Five years since the economy tanked, industry analysts at Edmunds.com, predict it’s still strong enough to push U.S. car sales to 16.4 million vehicles next year from 15.5 this year.
If they’re right, it means 2014 will be the best year for new car sales since 2006, when sales hit 16.5 million.
The main reason for the continued upswing is the increasing average age of cars currently on the road, now a record 11.4 years. But regular oil changes can only extend a car’s life so much. When the really big repair bills start coming in, people start looking to trade in their road relics. And there are a few other factors now making that move a little easier.
According to Edmunds.com Chief Economist Dr. Lacey Plache, used cars are still fetching relatively high prices. High trade-in values and easier financing are leading buyers back to the new car market.
At the same time, Plache points out about 500,000 more car leases will expire this year than last. Another 300,000 are set to expire in 2014. That’s expected to account for about a third of all expected sales growth next year.
As good as that sounds, Edmunds.com also points out that 2014 won’t be a barn-burner. Even if sales meet their expected 6% sales growth, 2014 will likely post the slowest year-to-year growth since sales bottomed in 2009.
“The economy has not yet improved enough for recovery to widely reach the groups hardest hit by the recession, including young people, lower income households and small businesses,” Plache said. “Even though auto sales from these groups have improved from recession lows, their participation in the recovery still lags the rest of the market.”
Source: Market Watch
