NADA: April Auto Sales Continue to Lead Economic Growth
Despite the average retail transaction price rising more than 3%, the NADA’s chief economist believes that future auto sales will continue to be backed by strong economic tailwinds.
MCLEAN, Va. — Falling gasoline prices and continued pent-up demand have spurred spending on new cars and light trucks, with average retail transaction prices rising more than 3% in the first quarter compared to the same period a year ago, the National Automobile Dealers Association (NADA) reported this week.
The average retail transaction price for a new vehicle was $33,189 through the first quarter.
“Consumers clearly feel confident enough in the economic recovery to make big-ticket purchases,” said NADA Chief Economist Steven Szakaly. “While we’ve seen a pullback in investments in other industries, particularly in oil-related industries, automotive retailing remains a growth industry.”
The NADA has forecasted sales of 16.94 million new-light vehicles for 2015.
“The automotive-retailing sector is continuing to outpace growth in the overall U.S. economy,” Szakaly added. “Economic and employment growth were slower than expected in the first quarter but vehicle sales remain strong.”
The strong summer selling season and the allure of new-vehicle models will likely keep sales humming, despite an expected gradual rise in gasoline prices by about 11% over the next eight months of the year, according to the NADA. This year, the light-truck segment, which includes SUVs, CUVs, minivans and pickup trucks, is expected to outsell cars by 56% to 44%, respectively.
The Fed is expected to delay an interest rate increase, but Szakaly said he believe any increase will likely be small. The NADA now forecasts the Fed to raise rates by just 25 basis points in the fall and 35 basis points by the end of 2015.
“The historically strong spring and summer selling seasons will be driven by new and redesigned vehicles as well as competitive financing rates, which bode well for auto sales over the next several months,” Szakaly added.
Szakaly added that strong consumer demand in the used-vehicle market is keeping trade-in values high, which is another value for car buyers.
“Just like the new-vehicle market, we continue to see healthy demand for used cars,” he said. “Those same factors in the new-vehicle market, which include low financing rates, extra spending money and improving employment opportunities, are driving car buyers to the used-vehicle market as well.”
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