Why 2013 Will Be Another Huge Year for Car Sales

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In 2012, U.S. consumers purchased over one million more new cars than the year before. This year, we’re expected to buy nearly one million more than in 2012. And in 2014? Yep, auto sales are projected to increase by another million or so over 2013.

What explains the steady rise in car sales? The answer probably has less to do with new cars drivers are being tempted to buy than it does with the older cars consumers still have parked in their driveways.

Without a doubt, there are plenty of exciting new models that have just hit the marketplace or will do so soon. As many as 40 vehicles will be freshly introduced (as redesigns or totally new cars) this year, according to the Wall Street Journal, which is more than twice the number of new cars rolled out in 2012.

(MORE: Top New Cars of 2013)

Speaking of 2012, it was no slouch in terms of auto sales. A Washington Post story recently declared that the national economy was saved last year largely due to the strength of new-car sales. At the beginning of 2012, analysts forecasts called for total sales to hit around 14 million, which would have been roughly one million more that were sold in 2011. Automakers and car dealerships happily surpassed the 2012 projections, with approximately 14.5 million new vehicles sold, representing a 13% increase over the prior year.

Analysts expect auto sales to rise yet again in 2013, though most likely with a percentage increase in the single digits over 2012. The auto research firm Polk is predicting new car registrations to reach 15.3 million in 2013.

Drivers have been making do with older vehicles for years. The average car on U.S. roads in 2012 was over 11 years old, up from 10.6 years in 2010 and 9 in 2002.

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Despite having a strong 2012, auto sales have been in something of a lull for years. A record-high 17.5 million vehicles were purchased in the U.S. in 2005, but after that the industry entered a slump, with a growing segment of consumers opting to repair their older vehicles rather than buy new ones. Restricted access to credit also stopped many consumers from buying or leasing new cars.

The Great Recession and continued uncertainty in the economy are rightly blamed as prime reasons that consumers have been hanging onto their cars longer and longer, but they’re not the only reasons. Better built, longer lasting cars deserve some of the credit too; at some point in recent years, it became expected that a car would last at least 100,000 without requiring major repairs, and 200,000 miles became the mark at which an owner could brag about his car’s impressive lifespan—and then just keep on driving it, hassle free.

But at some point even the most reliable vehicles must be put to sleep. The average car is 11.1 years old, meaning that there are quite a few automobiles on the road far higher in age than that. We’re talking 15, 20 years old. Each car is different, but overall, the numbers indicate a large portion of vehicles need to be replaced.

(MORE: The Worse the Economy, the Better Business Is at Auto Repair Shops)

Accordingly, analysts are now calling for auto sales to top 15 million in 2013, and then to surpass 16 million in 2014. While that’s still below the mark hit in 2005, it represents strong growth for the industry. And while the increase in sales may come partly as a result of the better gas mileage, high-tech innovations, and cool new style offered in the latest cars and trucks, for the most part sales will rise because sales were so weak, relatively speaking, in recent years. All of that “pent-up demand” drove consumers into dealerships for new cars last year, and it’ll continue boosting auto sales in the years to come.

3 comments
BobJan
BobJan

This shows that "Manufacturing" and not much else is the engine of the United States economy. Everything else is needed but manufacturing is what pulls any nation up by their "bootstraps". The financial economy we've embellished for the last 20 to 25 years has proved itself to be nothing more than a vapor, that doesn't last and doesn't help everyone. Manufacturing on the other hand starts at the bottom and goes all the way up. Manufacturing=companies, buildings, machinery, transportation to move the products, semiskilled people, skilled people, highly skilled people, engineers, research and development and so on. I'm sure I've left some things out but you get the point. So it seems that not letting the auto companies fail was a good investment with government help. Financial didn't lift China or Vietnam or any of the other countries out of their problems. "MANUFACTURING " did.

ke
ke

This doesn't seem likely to last.  Everything I've read elsewhere discusses how younger Americans are much less interested in driving than older generations, both waiting longer to get their licenses, and driving less frequently.  Given the rise of many alternatives to owning a car (like ZipCar, and the growing bicycle and public transportation infrastructure of the cities that young people and baby boomers alike are moving back to), it seems that the market for cars has to be dominated by a gradually shrinking and aging demographic.

padgettsemi
padgettsemi like.author.displayName 1 Like

Great news for Michigan . . . and Michigan business owners (ahem).