As total new-vehicle retail sales in the United States are projected to reach 6.5 million for the first half of 2014, consumers are paying record prices for new vehicles. This is a 6% increase over the first half of 2013, even though extreme weather negatively affected sales during the beginning of the calendar year. However, spring has brought a succession of record-setting months. Sales have increased on a year-over-year basis for each of the first six months of 2014 on a selling-day adjusted basis.
Transaction prices for the first six months of 2014 are at record levels, averaging $29,630, an increase from $28,880 a year ago. Consumer expenditures on new vehicles through the first half of the year also are at a record high of $194 billion, a $14 billion dollar increase from the same period in 2013.
Automakers and lenders are supporting higher prices by providing longer loan term options. Loans with term of at least 72 months now account for 31.8% of retail sales in the first half of 2104, up from 30.2% in 2013. Whether this is another bubble in the making remains to be seen.
Leasing is also increasing, now accounting for 26% of retail sales, compared with 23.8% for the first half of 2013.
Total sales – including sales to fleet buyers – through the first half of 2014 are expected to reach 8.1 million, a 4% increase compared to the same period in 2013, based on a sales forecast developed jointly by J.D. Power and LMC Automotive.
“Looking forward, we expect that strong sales momentum to carry into the second half of the year,” says Thomas King of Power.
