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Second-Half Auto Sales Rise with Better Credit Terms, Lower Interest Rates

Second-Half Auto Sales Rise with Better Credit Terms, Lower Interest Rates

By Jeff Youngs, July 22, 2013
The second half of 2013 is beginning on a high note for consumers and for the auto industry in the U.S. market. Based on figures from the first 10 selling days of July, new-car and light-truck sales are expected to climb by as much as 12% from a year ago to nearly 1.34 million units (vs. 1.15 million units in the year-earlier period), according to a monthly sales forecast update from J.D. Power and strategic partner LMC Automotive.

July continues to be a good time for consumers to consider buying or leasing. There is more available credit in terms of leasing, and extended-term financing--72 months or longer--has become more popular, according to the Power Information Network(R) (PIN) from J.D. Power.

The first half of 2013 is carrying sales momentum forward. Both new- and used-vehicle transaction prices in the first six months of 2013 increased by an average 3%, based on our PIN transaction data. Some PIN auto sales trend data highlights for the first half:

  • The average price for a new vehicle in the first half was $28,824.
  • The average used-vehicle price was $18,751 so far in 2013.
  • Longer-term loans (72-months+ terms) account for 30% of retail new-vehicle transactions at dealerships in the first half--up from 29% in the first half of 2012.
  • Leasing also has become more popular--increasing to 24% of all retail transactions in the first half, up 3 percentage points from 21% in the same period of 2012.

In commenting on these trends, John Humphrey, senior vice president of the global automotive practice at J.D. Power, said, "Elevated new-vehicle transaction prices are being enabled by the availability of longer-term loans, affordable leases and strong used-vehicle values, compounded by the availability of low interest rates."

On another positive note for the U.S. market, Jeff Schuster, senior vice president of forecasting at LMC Automotive, said that the 2013 sales forecast has been raised by 200,000 unit sales to 15.6 million units from 15.4 million units. Schuster notes,
"With a strong tailwind, it is not unreasonable to think about a 16-million-unit level of demand in 2013"--a level not seen since before the economic downturn in 2008.

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