Auto sales to remain robust in 2014 in US
The Motley Fool reported that despite reporting disappointing sales results for December, the US auto industry registered its best performance since 2007 in 2013.
Strong performance in 2013
U.S. auto sales rose 7.6% year over year in 2013, even though December sales results were disappointing. Industry sales were 50% higher than in 2009, when the recession sandbagged auto sales. Toyota, the world's largest automaker, saw its 2013 sales in the US rise 7.4% year over year to 2.24 million vehicles, driven by a 12% rise in the Japanese automaker's luxury Lexus division. General Motors sold nearly 2.8 million vehicles in the US in 2013. The automaker's retail sales rose 11% in 2013, while its total sales climbed 7%. The company managed to post strong results for 2013 despite a weak December that saw retail sales fall 6%. Kurt McNeil, Vice President of U.S. sales operations at General Motors, said that 2013 was the year that GM and the auto industry put the last traces of the recession in the rearview mirror. Ford's 2013 US sales totaled around 2.5 million vehicles. The company saw double digit annual retail gains across its lineup, with cars seeing a 12% increase, utilities seeing a 13% increase, and trucks seeing a 17% increase.
Why U.S. auto sales will continue to improve in 2014
US auto sales are expected to remain robust in 2014. Analysts currently expect U.S. auto sales to rise to 16 million-16.5 million in 2014. This would mean another solid year for automakers.
In 2013, sales were largely driven by significant pent-up demand as consumers replaced aging vehicles, a trend that is expected to continue in 2014. In a report released last year, automotive information provider R.L. Polk noted that the average age of all light vehicles on the road stood at 11.4 years, an all-time high.
Along with the need to replace aging vehicles, auto sales will also be driven by an improving consumer confidence. Consumer confidence in the U.S. has been improving on the back of a recovery in labor market. Record stock valuations have also bolstered consumer confidence, which should boost spending in 2014. This augurs well for automakers.
Another major driver of auto sales this year will be low interest rates. A report from Experian Automotive released last month showed that interest rates for new vehicle loans fell to 4.27%, the lowest rate since the research firm began publicly reporting the data in 2008. The report said that as a result of lower interest rates, consumers in the U.S. are taking out bigger auto loans with longer payback periods.
Source - dailyfinance.com/