Slow job growth, partisan division in Washington – none of it seems to be slowing U.S. auto sales.
Auto information company Edmunds.com is forecasting 2014 new car sales of 16.4 million, the highest level for the auto industry since 2006.
“The average age of all light vehicles on the road climbed to 11.4 years in 2013, and an aging fleet will continue to force buyers back to the market next year,” said Lacey Plache, Edmunds.com chief economist.
Despite that big 16.4 million number, growth in auto sales is tapering. The industry is expected to grow about 6% in the U.S. next year, down from an estimated 7% this year and 13% in 2012.
“The main drag on sales growth expected in 2014 comes from the need for stronger economic growth to allow many of the remaining sidelined buyers to return to the market, including young people, lower income households, and small businesses,” Plache said.
But as it bounced back from the recession, the auto industry has become among the strongest segments of the U.S. economy.
Plache said the industry has capitalized on moderate but steady economic growth and job creation, low interest rates and readily available credit, low inflation, a strong stock market and improved housing prices.
“These conditions — and, in particular, their persistence over a number of months — inspire consumer confidence and motivate consumers to buy new cars,” Plache said.
Sales next year also will get a jolt from what Plache estimates is a 300,000 increase in the number of people who will be returning a leased car compared with 2013. Most are likely to lease or purchase a new car again, she said.
While the auto industry is concerned that the federal fiscal battle could spiral out of control and upend auto sales, generally, “the consumer psyche when it comes to the automotive part of the economy is still very good,” said Bill Fay, the Toyota group vice president and general manager at
Fay is optimistic about the pace of sales in the fourth quarter of this year and going into next year.
Some Toyota dealers, Fay said, are reporting “sales as good as they have ever been going back to the height of the market a decade ago.”