Pent-Up Demand Will Continue to Fuel New Vehicle Sales in 2014
The U.S. auto industry’s new-vehicle sales in 2014 are expected to hit their highest level since 2006, due largely to pent-up demand as consumers continue to replace aging cars and trucks. A new forecast from Edmunds.com predicts that sales in 2014 will hit 16.4 million, up from an estimated 15.5 million the firm expected in 2013. The 2014 prediction is the highest total since 16.5 million vehicles were sold in 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,” Edmunds chief economist Lacey Plache said in a statement. “With used car prices still elevated over past norms and used car supply still tight, the new-car market will remain attractive.”
Dr. Plache says that the auto sales environment in 2014 will closely resemble the environment in 2013, for which Edmunds.com projects that new car sales will come in at around 15.5 million. That automotive environment includes a continued flood of lease returns to the market: Edmunds.com estimates that 500,000 more leases will expire in 2013 than in 2012. And Edmunds.com estimates that this number will grow by an additional 300,000 in 2014, accounting for about a third of all expected sales growth in 2014.
But the 2014 sales picture isn’t entirely rosy for the auto industry. Even if new car sales grow at the six percent rate that Edmunds.com projects, it will be the slowest year-to-year growth since auto sales bottomed out in 2009.
“The economy has not yet improved enough for recovery to widely reach the groups hardest hit by the recession, including young people, lower income households and small businesses,” explains Dr. Plache. “Even though auto sales from these groups have improved from recession lows, their participation in the recovery still lags the rest of the market.”[Source: “2014 Sales Forecast.” Edmunds.com. 8 Oct. 2013. Web. 23 Dec. 2013.]