Car Sales May Jump 18.7% Due To Demand For Fuel Efficiency

August 24, 2012

New car sales have been breaking records in 2012, and there's little sign of that changing in August. In fact, analysts at Kelley Blue Book expect that this month's figures could ring in 18.7% above last year, putting U.S. dealers on track for seasonally adjusted annual sales of 14.4 million vehicles.

What's moving?

KBB expects the biggest driver of this jump to come from fuel-efficient rides. Subcompacts should be at the head of the pack, with 42.4% gains over August of 2011. (That's not only because of their fuel economy, but also because there have been so many recent additions to the segment, like the attractive Chevrolet Spark.)

Also making big strides: compacts and compact crossovers, sales of which are expected rise 30.9% and 38.1% over last year, respectively. Midsize vehicles will see slightly less growth, at 24.3%.

Interestingly, full-size pickups are also likely to climb by about 6.7% in August. Though today's models are more fuel-efficient than their predecessors, the gains may also be attributable to the rebounding housing market: advancing truck sales are usually a sign of growing demand in the construction sector.

Why now?

KBB attributes the strong sales to a number of factors, including:

  • Consumer sentiment, which is on the rise: Although the U.S. economic recovery seems sluggish, customers appear more optimistic about its long-term prospects and are more willing to invest in a new vehicle.
  • High used-car values: As we mentioned earlier this month, the difference in price between new cars and used cars can be pretty minimal. In light of that, a KBB survey found that 53% of customers who might've looked at used vehicles are instead opting for brand-new ones.
  • High gas costs: Prices at the pump have continued to climb, putting pressure on family budgets. Shoppers are looking at fuel-efficient rides as a way to save money down the road.

Of course, there's at least one factor skewing these impressive results: sales growth from Japanese automakers, particularly Honda and Toyota, which are expected to rise 51% and 31% over August of last year, respectively. 

As you might recall, Mother Nature made 2011 a very tough year for Japanese car companies, thanks to the Tohoku earthquake and tsunami that devastated the country in March of that year and unrelated flooding that crippled production in Thailand. Those events had a negative impact on inventory, which naturally impacted sales. So, we'd expect to see substantial growth in 2012 as Japan and its automakers recover.

However, KBB says that recovery from natural disasters isn't the only thing fueling growth at Toyota and Honda. The automakers have also benefited from redesigned models, and, of course, their largely fuel-efficient lineups. In fact, sales of the Toyota Prius grew 97% over the first seven months of 2012.

We'll compare these projections with real sales numbers in a couple of weeks, when official figures for August become available.

The Car Connection
See the winners »
The Car Connection
Commenting is closed for this article
Ratings and Reviews
Rate and review your car for The Car Connection
Review your car
The Car Connection Daily Headlines
I agree to receive emails from The Car Connection. I understand that I can unsubscribe at any time. Privacy Policy.
Thank you! Please check your email for confirmation.