When the recession hit, the auto world was one of the industries hit the hardest. The market it had relied on was no longer spending money and they in turn were about to go belly up. With a controversial loan, the industry was able to keep going to 2015, where it manage to set a record sales year. 2015 may be the year where it finally shows the auto industry is back.
For years, people avoided buying a new or used car. They simply couldn’t afford it with due to elements of the recession. For many, it was also because lenders had cut off access to subprime loans. Those with bad credit or low credit were unable to find car loans even when they needed it. As the years went on and the auto industry slowly recovered, that policy of being harder on offering loans started to go away and the lenders were being more open to loaning.
The employment rate is at the highest it has been in years and gas is at the lowest it has been since the recession first hit. It’s no wonder that people are finally getting out to purchasing vehicle. For some, it had finally hit the breaking point. They had been holding off and hoping that the current vehicle they owned would last through the hard time. Many drivers were avoiding trading in a used vehicle being unable to afford it. They sat on their current vehicle for longer than recommended and are now at a point where they simply need to get a new or used vehicle.
Subaru is having the best problem any company can encounter. As sales have skyrocketed in the United States, they are having trouble keeping up with demand.
In the first quarter of 2013, Subaru’s US sales went up 17 percent. January 2013 was 21 percent higher than January 2012; February was 11 percent higher; March was 13 percent higher; April was 25 percent higher; and May was 34 percent higher. According to Subaru, almost half of its global sales are here in the United States, and they have projected that the company will surpass its 2016 sales goal of 380,000 US units sold before the end of the 2013 business year.
With Subaru selling so well, however, production plants are running at full capacity so that they don’t run into dealer shortages. Subaru CEO recently told the Wall Street Journal, “If this situation persists, we’ll face a supply shortage.” If that is true, car shoppers who are considering getting a Subaru would be wise to purchase sooner than later this year.
All through the month of June, car news and commentary was saturated with talking heads claiming that auto sales would see a downturn this month, and the soaring sales could not continue.
Needless to say, those commentators will be eating a mighty helping of crow this week as auto makers are reporting continued growth across the board. Chrysler had a 20 percent sales increase in June, making it their best June since 2007. General Motors saw a 16 percent increase, Ford had a 7 percent increase, and Toyota had a stunning 60 percent increase, coming back from the 2011 natural disasters in Japan.
The conditions are perfect for this trend to continue as the summer weather compels people to the road for vacation, convenience for work, or an old-fashioned drive in the country. Also, interest rates are dropping with an average of 4.5 percent interest rate on a 60-month new car loan, so more consumers can afford to drive.
Every month seems to have the obligatory article about how well the auto industry is doing. There have been months of happy reporting about sales increases here and demands increasing there. It is a success story that is an easy topic. The question has always been, though, at the back of my mind how long that luck will hold out. I’ve wondered what the industry was doing to make sure that this increase in sales is the new standard and not just a moment in time. May could be the month that puts all of this progress to the test.
Auto Finance News posted an interesting read that posed that very question. The month of May was a bad month for the economy. The jobs reports that come out were dismal with only 69,000 jobs added, making it the weakest monthly growth in a year. It was bad enough that the report raised the unemployment rate up to 8.2 percent from 8.1 percent, but additionally, the confidence of the US consumer fell from 68.7 percent in April to 64.9 percent in May.
The question remains if this is going to have an impact on the upward swing of the auto industry. May is a notorious month for strong sales, so this might just be pessimistic thinking. I like to think that the industry is doing a good job of riding the wave, especially with many of them such as Chrysler making sure to keep people engage by bringing out new products like the Dodge Dart. Edmunds also made the prediction that car sales in the month of May would increase by 30 percent due in part to light vehicles continuing to sell well. Only time will tell if the rough economic reporting this last month is going to make a dent in the comeback story of the auto industry.
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Will March be the best month yet this year for American automakers? U.S. auto sales have continued to surprise even the most optimistic analysts, and now, it is expected that March sales will make the beginning of 2012 the best quarter in four years.
The Fiscal Times attributes the soaring auto sales to two factors. First, the economy is improving. It might not always seem like it, but the economy is improving slowly but surely. Second, car buyers are having an easier time finding financing. Part of that is due to services like Approved Loan Store which help people with poor credit and good credit alike get into a car.
Car ownership is an important part of economic recovery. Rising car sales are not only a sign that people have money to spend, it also shows that people are taking steps to avoid future problems. Car ownership has a strong correlation with less dependance on public assistance because employees are not dependent on public transportation and are not limited to employment options close to bus lines or subways. The fact that people are choosing car ownership is very encouraging to both U.S. automakers and Americans hoping for economic recovery.