Edmunds.com has raised its 2013 light vehicle sales forecast to 15.5m. The industry hasn’t achieved that level of annual sales since 2007.
“Car shoppers seem unfazed by fiscal issues in the news,” said chief economist Lacey Plache. “Even though consumer confidence has been up and down so far this year, there are ‘wealth effects’ that are making Americans feel comfortable finally buying the new cars they’ve been waiting for.”
Plache said many people are feeling wealthier thanks to rising home prices and the strong stock market. Many have refinanced their home mortgages which, with an average mortgage, could save a homeowner US$210 per month and make room in the budget for a new car payment.
The improving labour market has put additional cash in some buyers’ pockets. And credit has been loosening more and more since the recovery began, which is key to car sales.
The fiscal cliff, the sequester and financial news from overseas have not had any noticeable impact on car shopping trends in 2013, according to Plache. But, she cautioned that any drama at home or abroad that rocks the stock market or dominates news headlines could deter some car shoppers.
Looking ahead, the industry still has an ace up its sleeve: More car leases are set to expire in the second half of this year than the comparable period last year, which means that a number of car shoppers will be in the market then regardless of state of the economy. That is likely to give the industry a solid year on year increase even when taking into account the strong 2012 finish.
“Sales per driver and vehicles per driver will remain below pre-recession levels even with 2013 sales of 15.5m cars, so there is room for even more improvement in 2014 and beyond,” noted Plache. “Automakers and car dealers with the right products and branding messages are looking at a great growth opportunity.”