U.S. Auto Sales Reach A Record High
Thanks to an improving economy and other incentives for car buyers, U.S. auto sales have reached their highest point in 15 years and may possibly make history this year. Although those in the U.S. auto industry still have to work hard for every sale, things are continually looking up for the market.
A Record Calendar Year
This record growth in auto sales was highlighted in an October Wall Street Journal article, which noted that inexpensive gasoline prices, low available interest rates on car loans, and other incentives to buy from automakers and dealerships have made car ownership today cost as little as it did a decade ago. Consumers have noticed and are taking advantage of these low costs.
The article quoted General Motors as saying they were on track to “establish a record calendar year.”
Forbes cited online car shopping services TrueCar and Kelly Blue Book as predicting that 2015 car sales would break the overall record of 17.3 million cars sold, which was set in the year 2000; and Bloomberg News noted that all major automakers were projected to report October 2015 increases except Volkswagen (which is struggling amidst the scandal that it altered many of its vehicle’s diesel engines to cheated emissions standards).
More Cash, Bigger Cars
Not only did almost every U.S. automaker report growth, but the growth has also been notable for larger, more expensive cars.
From the report:
“Toyota, with the smallest of those projected gains at 8.5 percent, said that its sales rose 13 percent with SUV sales rising 20 percent at the namesake brand and 34 percent at the luxury Lexus division.”
U.S. News quoted Jeff Schuster, an analyst for the auto trends and predictive company LMC Automotive, as saying that buyers increasingly opting for bigger, feature-loaded vehicles with the cash that they’re saving on financing deals and other incentives. One example mentioned in the article: Sales of the eight-seat Cadillac Escalade have risen 47 percent.
A Growing U.S. Economy
This growth in auto sales is another indicator of the growth of the U.S. economy, which has helped consumers feel more comfortable investing in a new car after years of recession.
Bloomberg News quoted Schuster on the predicted growth of auto sales: “You have a consumer who feels good about the economy, who wants a new vehicle and who has the means to get it with relatively cheap credit. Everything is aligning.”
In fact, The U.S. Federal Reserve Bank has announced that after keeping the federal interest rate between zero and one-quarter percent since 2008 in attempt to help grow the economy during the long recession, it plans to raise the rate in the near future.
As the New York Times explains:
“The announcement will be akin to a doctor’s decision that a patient is well enough to be gradually taken off medication. The thinking inside the Fed is that the economy is finally healthy enough that borrowing costs should return to more “normal” levels to help keep future inflation from accelerating too much.”
A higher federal interest rate might mean higher rates on car loans in the near future, and some of the recent spike in sales growth might be attributed to “pent-up demand” from the years of recession, which may indicate that sales won’t continue to skyrocket much long.
Eric Lyman, TrueCar’s vice president of industry analysis, told U.S. News & World Report that the effects from that pent-up demand “should peter out in the middle of 2016.” However, automakers are preparing for this possible future decline in a competitive economy.
Photo credit: frankieleon / CC BY 2.0