Automobile sales are on the rise, mostly due to increasing optimism due to higher stocks and home prices, more widely available credit, an increasingly aged fleet, and a host of new models in popular segments. 2013 has brought a growing stream of buyers into dealerships, creating a bright spot in a shaky U.S. economy. Even more auto sales growth is expected in 2013; Edmunds.com’s forecast is 15 million. Auto sales, along with the recovering housing market, will lead economic progress, decreasing the need for government stimulus programs.
Many of the same factors now in play will continue to support car sales momentum in 2013. There will even be additional development from the return of subprime lending allowing the release of pent-up demand from subprime borrowers who were unable to finance new cars in recent years. Sales also will receive an improvement in 2013 from an expected nearly 500,000 additional lease returners, compared to 2012, who will lease or purchase a new car or truck when their current leases end.
Trucks will rise in popularity in 2013, thanks to the following all-new models and greater new home construction and post-Sandy rebuilding:
• 2013 Ram 1500
• 2014 Chevy Silverado 1500
• 2014 GMC Sierra
Increased sales are also in store for fuel-efficient cars and trucks, especially compact cars, subcompact cars, and hybrids. Despite fairly steady gas prices, consumers are finally ready to commit to these segments for longer than the length of a gas price spike. They are not eager to commit to all-electric vehicles, though, so automakers will increasingly concentrate their efforts on plug-in hybrids and hybrids. And, for those consumers desiring hybrid technology without the hybrid cost, additional hybrid features will be found in more economical conventional cars as manufacturers upgrade their efforts to meet the government’s Corporate Average Fuel Economy (CAFE) standards.
Certainly, rivalry will be aggressive among automakers, with no major automakers fighting bankruptcies or recuperating from natural disasters. And, as 2012 has shown, the possible market share battles will go beyond the top tier of the U.S. market, with traditionally smaller players such as Volkswagen throwing their hats into the ring in a serious way. In addition to the classic evolutions in fuel efficiency, comfort, and style, automakers will endeavor to distinguish their vehicles by developing and offering more active safety technologies on more vehicles — from lane departure warnings and blind spot alerts, all the way to driverless cars!
Development in the new car market will help the used car market next year as well. The rush of off-lease vehicles and older trade-ins will increase used car inventories in a range of model years. As a result, prices will decrease to $200 to $300 less per vehicle, on average. Naturally, weaker used car prices is one trend that won’t help new car sales, as some buyers on the fence will opt to purchase used rather than new.
In conclusion, the United State’s auto industry has revealed continual momentum these past few years, making solid advancement toward recovery of pre-recession sales levels. Momentum will slow in 2013 but growth will continue. What’s especially reassuring for the economy is the current competitive power of the automakers. Consumers will continue to profit from exciting new models and technologies — and potentially lower prices — as automakers fight for market share, making 2013 especially interesting to watch.
