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Pent-Up Demand Swells During Government Shutdown, CNW Reports

October 22, 2013

BANDON, Ore. — The 16-day government shutdown, which ended on Oct. 16, may have caused more consumers to delay their car purchases, but it also caused pent-up demand to swell, CNW Research reported this week. The firm’s short-term outlook for vehicle sales: cloudy.

“As more Americans begin considering a new-vehicle acquisition, the number reported increases. That’s the normal condition of things,” wrote CNW’s Art Spinella in his firm’s monthly newsletter. “But the government slowdown was like putting a dam on a river, causing pent-up demand to swell to 128,600 from September’s 109,500. A year ago, pend-up demand was 102,500.

“Effectively, the indication is that the mess in Washington, D.C., kept people on their couches instead of in showrooms.”

So when will those consumers come back to the market? And will they return in time to impact October sales numbers?

Since February, purchase delays have declined virtually every month from nearly four months to 2.89 months in September. Spinella estimated that the government shutdown pushed purchase delays to 3.4 months.

“Simply translated, it means those people who put off a vehicle acquisition are now planning to wait until next year to reenter the marketplace,” Spinella wrote. “Will that change because the government is fully operational now?”

A survey conducted by CNW after the government slowdown showed a slight decline to 3.38 months. But with the holiday season approaching, Spinella wondered if other financial considerations will rise to the top of consumer budget demands.

“As CNW mentioned in its Retail Automotive Summary three years ago, while Americans at that time claimed they were going to save more in the future, the reality is the use of credit is skyrocketing. At least until the government shutdown,” Spinella wrote. “So the underlying condition is one of spending rather than saving.

“Auto sales should, if this holds, return to an upward movement in 2014.”

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