With 2014 in full swing, key market trends have emerged over the last few months that could forecast the type of sales numbers that companies can expect to see the rest of the year. Equifax has identified a number of factors that are pushing auto sales up in the early part of 2014, as well as some that could potentially drive them down as the year wears on. They include:
Rising pent-up demand
For whatever reason, many people put off buying a new vehicle in 2013. Despite sales of 15.5 million new vehicles last year, there were over 26 million additional vehicles projected to sell that didn’t. In 2014, those consumers who waited are now out in full force.
Scrappage rates up in 2014
After years of cycling through owner after owner, many vehicles purchased during the early 2000s are reaching the end of the line and are now being scrapped. Consequently, the sale of new automobiles is up.
Strong economy, low interest rates and new technology
When the economy is good (or at least better), consumer confidence is high, and interest rates are low, auto sales inevitably go up. Add to that some new advances in GPS vehicle tracking and other technology in vehicles, and more people are heading to their dealerships.
Auto density dropping
As far as trends that could hurt auto sales go, none is more dangerous than auto density. People are both driving less, and driving less on their own. Ever since 2006, the ratio of vehicles per driver/household has been dropping, and there’s no reason to believe that it won’t continue.
Used vehicles more attractive
Another factor that could hurt the purchase of new vehicles is the prevalence of used vehicles. Vehicle quality has risen over the last few decades, and it’s not uncommon for vehicles to remain reliable for many years.