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Automotive industry 'outshines' the rest of the economyFriday, July 19, 2013

Category:Car Enthusiast Talk

The latest report from J.D. Power and LMC Automotive showed that July will be yet another strong sales month for the automotive industry, as it continues to be a bright spot in the overall economy. 

According to the report, new-vehicle retail sales are expected to reach 1,127,100 in July, up 12 percent on a year-over-year comparison. These sales translate to a seasonally adjusted annualized rate of 13.2 million units, which is level to the strong pace set last month. 

As a result of the strong sales so far this year, LMC Automotive raised its total light vehicle forecast in 2013 to 15.6 million units. 

"The overall trend in vehicle demand has outshined economic growth, and looking forward, the improving economic fundamentals should hold demand at the current level, if not accelerate it over the next several months," said Jeff Schuster, senior vice president of forecasting at LMC Automotive. "With a strong tailwind, it is not unreasonable to think about a 16 million-unit level of demand in 2013."

In addition, the report showed that North American vehicle production is up 4 percent from January to July when compared to the same period of time last year, and Ford is leading the increases, up 14 percent. Much of these strong sales have been due to the availability of leasing. John Humphrey, senior vice president of the global automotive practice at J.D. Power, said that the increases in new vehicle transaction prices are being pushed along by the availability of longer-term loans, affordable leases and strong values in used cars, as well as low interest rates. 

Leasing is helping sales
A separate report from Edmunds indicated that leasing opportunities are helping to boost sales.

The report showed that of the vehicles sold from January to May, 29 percent were new cars, up from 27.6 percent on a year-over-year comparison. In addition, of the new cars sold during that time, 25 percent were leased, beating the previous record of 22 percent set last year. 

"Lease offers have become more important to automakers' and dealers' sales strategies," says senior analyst Jessica Caldwell. "Luxury brands have for a long time relied on leasing to maximize their sales volumes. Now mainstream brands are riding that wave, drawing buyers with the promise of lower monthly payments through leasing."

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