Car enthusiasts, manufacturers and dealers are gathering at the annual Charlotte Auto Show uptown this weekend amid a more optimistic mood, as a recovery in auto sales continues for the fourth straight year.
But sales remain well below pre-recession levels, and much of the surge in sales is believed to be a result of necessity combined with more accessible credit, allowing consumers to borrow more easily. During the last few years, the U.S. passenger vehicle fleet has reached a record average age almost 11 years as people held off on replacing their cars during the recession.
Vehicle sales in the U.S. this year are expected to total 14.5 million, down from pre-recession sales levels that regularly topped 16 million per year but up from last years total of 13.5 million.
We definitely have some wind at our back right now, said John Desmond, a market area vice president for Charlotte-based Hendrick Automotive Group. He oversees the Charlotte areas luxury brand sales, and said new-car sales are up 16 percent at Hendricks BMW dealerships and 9 percent at Mercedes.
People have more confidence, said Desmond. This is the new normal, and people are adjusting. In Charlotte, especially, the real estate market is coming back. Things are stabilizing, or even growing.
At Charlotte-based Sonic Automotive Group, which operates 113 dealerships, revenue for the first nine months of the year is up more than 11 percent compared with the same period last year.
The majority of the increase is due to new-car sales, which rose 19.5 percent during the first nine months of the year.
The whole concept of pent-up demand, it turns out, is actually true, said Jesse Toprak, an analyst for car sales data aggregator TrueCar.com. A lot of consumers who postponed buying a new car in the last several years are now having to replace vehicles.
Some of the increase is also due to increased inventory availability: Much of Asias auto production was slowed last year because of the Japanese tsunami and floods elsewhere.
At Hendrick, which opened a luxury auto mall in north Charlotte this year, Lexus sales rose 49 percent. Thats because there was so little inventory available last year due to disaster-related production delays, Desmond said.
Another factor in rising sales has been the return of easier credit. Toprak said 85 percent of new vehicles are leased or financed, with only 15 percent of buyers paying cash. And not only are banks lending more freely, but interest rates are at historic lows, making a loan or lease more enticing for consumers.
Right after the recession, banks were pretty much at a paranoid level of low lending, said Toprak. Before the recession, it was lending to anyone with a pulse. Now, he said banks are acting more reasonably.
Looking ahead, there are looming challenges, analysts say. The fiscal cliff, Europes continuing economic woes, a slowdown in the Asian economies, instability in the Middle East and domestic political gridlock all could damage the recovery. But Toprak said forecasts still call for a rise in auto sales next year, to 15.5 million units close to pre-recession levels.
Desmond said Hendrick Automotive expects the recovery to continue. Those things obviously concern us. We definitely want to keep an eye on that, he said of challenges such as the fiscal cliff. We have confidence in our government that were going to work through things. Were very optimistic. Weve been through a lot in the last few years.
Portillo: 704-358-5041 On Twitter @ESPortillo
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