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Industry Proves Resilient During Government Shutdown

October 17, 2013

By Stephanie Forshee

WASHINGTON, D.C. — Edmunds.com and Kelley Blue Book (KBB) said this week the industry proved resilient during the 16-day government shutdown, which ended late Wednesday when President Barack Obama signed into law a bill to fund the government’s reopening through Jan. 15.

Dr. Lacey Plache, chief economist for Edmunds, correctly predicted at the beginning of the month that the projected 15.7 million SAAR would not falter due to the government shutdown. And based on the first 11 days of October, “the current pace and historical pattern point to October sales of around 1.25 million, or a SAAR of 15.7 million (compared to 1.14 million or SAAR of 15.3 million last month).”

“Despite its best efforts, the government’s disarray has been no match for the forces driving momentum in the automotive market,” Plache said. “Still, given that the latest deal on the table in Congress is just a temporary fix, the next potential speed bump for car sales will come in early 2014, when it looks like we’ll have to jump back on this merry-go-round all over again."

Edmunds officials said the firm does not believe the government shutdown forced buyers to delay purchases; however, Kelley Blue Book acknowledged it is a possibility.

"Based on experience with previous situations like this, consumers will quickly forget about the government shutdown and return to the buying process,” said Jack Nerad, KBB’s editorial director. “At most, the partial shutdown caused some people to delay purchase. It is unlikely it caused many people to cancel a purchase outright."

Possible reasons for any delay in purchase could be related to concerns for safety, said KBB officials, noting the impact of the shutdown on the National Highway Traffic Safety Administration (NHTSA). During the government stoppage, KBB Market Intelligence conducted a survey among site visitors who were looking to purchase a vehicle in the next six months. The findings revealed that while 64 percent were not impacted at all, 18 percent of shoppers said they would “wait until the issues are resolved.”

“Over the past three months, safety has been the second factor of importance when considering a vehicle, second only to durability or reliability,” said Arthur Henry, KBB’s manager of market intelligence. He predicted any delay could be attributed to the fact “shoppers may feel they do not have enough information to make an educated decision,” with NHTSA services put on hold the past two and a half weeks.

While 82 percent of those surveyed were first unaware of the shutdown’s effect on NHTSA, the majority expressed concerns that the agency was not processing consumer complaints of vehicle defects (84 percent), issuing public notices of safety recalls (82 percent) and wasn’t conducting crash tests and issuing ratings (76 percent).

In terms of financing, 60 percent of KBB.com visitors who plan to finance their next vehicle purchase reported they expect interest rates for auto loans to rise in the coming year.

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