Automakers sold roughly 14.5 million new cars during calendar year 2012 -- up 13% over 2011. Will that kind of growth continue in 2013? The Wall Street Journal and marketing firm Polk have already said "Yes, indeed", and now the National Association of Automobile Dealers has announced its own rosy predictions.
NADA's chief economist, Paul Taylor, predicts that new-car sales will reach 15.4 million by December 31. To prove it, he identifies seven factors fueling America's current craze for new cars:
1. Pent-up demand: According to Taylor, Americans are still recovering from the belt-tightening of the Great Recession. The average age of cars on the road in the U.S. now hovers around 11 years. True, that's partly because cars are built to last longer than they once did, but it's also because of self-imposed austerity measures imposed on family budgets. In other words, people have been waiting a long time for new wheels, and 2013 may be the year they indulge.
2. Credit availability: When banks failed during the Great Recession, credit became much harder to find. That, in turn, made it difficult for shoppers to purchase big-ticket items like automobiles. Now that credit restrictions are loosening, customers can return to showrooms with confidence that they'll be approved for a loan -- and at very low interest rates.
3. New vehicles: Sure, that old car may be running just fine, but there's nothing like the sight of a shiny vehicle on TV (or in the driveway next door) to get consumers thinking about a new ride. New cars generate excitement, and excitement generates sales. Given that some 50 new models are set to debut at this week's North American International Auto Show, chances are good that consumers will be eager to get their hands on something fresh this year.
4. Improving employment figures: It should be obvious that when more people have jobs, more people will be inclined to purchase expensive goods like automobiles.
5. "Fiscal cliff" avoided: Though politicians in Washington turned the negotiations into a nail-biter, tax rates will remain low for most Americans, which will keep more money in their pockets and inspire more confidence.
6. Improving home values: Homes are a major investment, so when the real-estate market tanked, the net worth of American families took a real hit. Now that the market is on the upswing, family nest eggs are looking much better, making consumers more comfortable with the idea of shelling out for a new ride. (Added bonus: all that new construction should be especially beneficial for the truck market.)
7. Shortage of used vehicles: When sales slumped during the Great Recession, automakers stopped producing so many vehicles. In other words, the number of potential buyers continued to grow, but the supply of vehicles shrank, which helped set us up for today's used-car shortage. As we told you last year, the difference in price between some new cars and their one-year-old equivalents is almost negligible. As a result, Taylor thinks that many consumers will opt for the brand-new version.
Are you in the market for a new car? Are any of these factors weighing on your decision? Sound off in the comments below.