US auto sales expected to hit record high in 2015
Six years after the recession coerced millions of Americans to postpone buying a fresh car or truck, a forecast released Wednesday predicted retail auto sales in the U.S. will climb to a record high in 2015.
Despite a powerless demonstrating from the auto sector in September —when dealership sales fell 0.8 percent—J.D. Power and Associates said that sales of fresh cars and trucks at U.S. auto dealerships will climb to 13.83 million in 2015. That would put them slightly above the previous record of 13.8 million in 2004.
The improving economy and growing consumer request for newer, more fuel-efficient vehicles that include the latest safety features and in-car connectivity are driving the trend.
“Right now the auto industry is in the midst of a cycle where sales and pricing are very strong,” said J.D. Power’s Deirdre Borrego. “I’m cautiously optimistic that will proceed at least through next year.”
But it’s not just retail auto sales—vehicles that are sold directly to consumers—that are expected to see a boost. The hard’s forecast comes as Wall Street analysts are predicting total U.S. industry sales—which also account for the sale of fleet vehicles to rental car companies, corporations and government agencies—could top seventeen million next year.
The increase, while welcome news for the auto industry, has led some to question whether the strong market is sustainable.
“As long as the economy remains strong and interest rates stay relatively low I think sales will hold up well,” Borrego said.
Record prices, longer loans
As retail sales climb to a record high, automakers and dealers are selling vehicles for record prices.
J.D. Power said the average transaction price paid by consumers at dealerships this year is $30,026, which will likely lead to an all-time high of $407 billion for retail sales in the U.S.
“Consumers are able to pay more for the cars and trucks they’re buying because auto loan interest rates have been so low,” Borrego said. “At the same time lenders are writing loans for longer terms, so monthly payments have stayed relatively plane for car buyers.”
The average monthly payment for fresh vehicle buyers is $457, according to J.D. Power. In addition, the rock hard calculates almost one-third of all auto loans for fresh vehicles are for a term length of six years.
Still, while the percentage of borrowers falling behind on their loans remains below average, some consumers are having trouble making their monthly payments. A latest report from Experian found that the percentage of auto loans that were delinquent or ended in repossession surged in the 2nd quarter.