NADA Economist: U.S. Economy Continues to Gain Momentum in 2013
Orlando, Fla. – The sales momentum of new cars and light trucks established last year is likely to continue in 2013, predicts Paul Taylor, chief economist of the National Automobile Dealers Association (NADA).
“Old cars on the nation’s roads and available credit assure a good year for car sales as the economy continues to make modest but positive progress in overall growth,” Taylor said. “Early in the year, real GDP growth will be about 2.3 percent with that growth approaching 3 percent in the last half of the year.”
Taylor expects more than 15.4 million new vehicles will be purchased or leased in the United States this year, an increase of 1 million vehicles over 2012. Last year, 14.4 million new vehicles were sold.
“Pent up demand, affordable auto loans and enticing new-vehicle designs add up to a solid sales year that will outperform the overall U.S. economy,” he said.
Taylor highlighted seven key factors that will support stronger auto sales in 2013:
1. Pent-Up Demand. The continued replacement of cars and trucks that aged to a record level during the recession will propel sales this year. Cars on the road are a record 11.1-years-old, light-duty trucks 10.4-years-old and the mix is 10.8-years-old.
2. Available Credit. Low interest rates for auto loans, which are expected to increase in future years, will help motivate consumers to finance a new-vehicle purchase in 2013.
3. More New-Vehicle Choices. New-vehicle models with greater consumer appeal in design and fuel efficiency are headed to dealerships. New models are being introduced at major auto shows across the country.
4. Declining Unemployment. The modestly falling rate of unemployment has led to solid consumer confidence. Consumers now expect to avoid layoffs.
5. Used-Vehicle Shortage. The continued short supply of used vehicles for sale resulting from the past recession will cause some consumers to purchase new vehicles this year, instead of used ones. Elevated prices of used cars assist trade-in equity.
6. Fiscal Cliff Avoided. So far, modest action by Congress to avoid the fiscal cliff, which avoids some tax hikes, will result in more new-vehicle sales early in the year.
7. Improving Home Values. Residential real estate prices are showing a recovery in nearly all states in the nation, increasing the typical family nest egg. As a result, consumers are more confident about spending on a new vehicle purchase.
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