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Car Sales “Mini-Bubble” to Last Into Early 2012, Edmunds.com Reports

December 06, 2011

SANTA MONICA, Calif. — Edmunds.com reported today that it expects that consumers who deferred their new-car purchases last summer will continue their return to the market in the coming weeks. As a result, the “mini-bubble” of new-car sales that has appeared over the last few months is giving the industry a year-end boost and promises a notable start to 2012.

“New-car buyers now have much better buying opportunities that just weren’t available this summer when production shortages from the Japanese earthquake limited supply and raised prices,” said Lacey Plache, Edmunds.com chief economist. “As a result, this mini-bubble should support sales well into the first quarter of 2012.”

Edmunds.com estimates that consumers deferred 300,000 potential new-car purchases over the summer, with about one-third — or about 100,000 — of those consumer who deferred their purchase having already returned to the market. Edmunds.com also predicts that another 100,000 potential car buyers will return to the market March 2012. How long it takes for the industry to realize the remaining 100,000 remains to be seen.

“The exact number of remaining sales that will return — and their exact pace — depends on economic conditions, since some portion of buyers likely have been deterred by current economic uncertainty,” Plache said. “But positive trends in the U.S. economy, such as steady job growth, moderate inflation and income growth could reassure buyers enough to push them to finally make their new-car purchases.”

While some of the deferred buyers may have turned to the used car market, the impact of this on the new-car market will be minimal, Plache added. Like their new-car counterparts, used cars also were subject to tighter inventories and higher prices this summer due to increased demand for Japanese and fuel-efficient cars by consumers and dealers. As a result, the ratio of new to used cars sold from May to August increased slightly to 0.33, compared to 0.32 for the same period last year.

To read the full analysis, click here.

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