Surging Car Sales: Some Good News on the Economy

It’s not all gloom and doom on the economic front.

One bright spot is a healthy rebound in new auto sales.  U.S. auto sales jumped 22 percent in June.  In 2011, new auto sales were running in the range of 11 million units per year.  Now, they total over 14 million.

What’s behind the sales growth?  It depends who you ask.  It’s due to “low interest rates, plentiful  deals, and moderating gasoline prices,” says Automobile magazine. Trade publication Automotive News says automakers credit “new models, pent-up demand, wider credit availability and solid fleet sales.”
 
Here’s another key reason.  The average U.S. car on the road is indeed getting older and in need of replacement.  Polk research firm said the average age of a car in the U.S. last year was over eleven years old, a new record.  In a USA Today interview, Polk Vice President Mark Seng said that people now “hang onto their cars longer because automakers are making them far better than they did in 1995, the first year that Polk began tracking the average age.”
 
Strong car sales, along with the budding housing recovery, should help dispel the dark clouds overhanging other areas of the economy.  Making the argument that economic growth may be stronger than it looks, New York Times reporter Annie Lowrey says “economists pointed to surging new car sales as a good economic indicator: a sign that households are confident enough to make a major purchase and that they are accessing the credit markets.
 
“The surge in car sales is disproportionately important,” said Ian Shepherdson, an economist and forecaster at High Frequency Economics. “It means that you’re willing and able to take out a loan — and that’s quite a good sign.”
 
Tip:  In the market for a new car? Try these sites:
Edmunds.com – car reviews plus the month’s top deals and incentives.
Kelley Blue Book for best car lists and used car values.
 

About Mari Adam

Mari Adam, Certified Financial Planner™ and President of Adam Financial Associates Inc, has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

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