Report: The ‘Wait’ May Be Over; Industry Expected to Reach Pre-Recession Levels in 2014


SANTA MONICA, Calif. - 

“Good things come to those who wait,” Edmunds.com chief economist Lacy Plache wrote in a blog post last week.

And it seems the automotive industry has waited long enough. In highlighting industry expectations for 2014, Plache touched on a plethora of positive points, including expected boosts in new sales, lease returns and more selection for pre-owned customers.

Plache expects new-car sales to pass the “pre-recession threshold” of 16 million units in 2014.

“Edmunds.com's forecast of 16.4 million light vehicles expects car buyers to continue to flock to market, taking further advantage of more freely flowing credit to refresh the oldest vehicle fleet in history,” Plache wrote in a post on the Industry Commentary section of the Edmunds.com website.

And, of course, more new sales is a harbinger for good news in the used market, as well.

More new sales means more trade-ins for dealers.

And that’s not the only supply channel that will be helping pre-owned dealers out in 2014.

“Sales also will receive a boost in 2014 from an expected 300,000 additional lease returners, compared to 2013, who will lease or buy a new vehicle when their current leases end,” Plache said.

These off-lease vehicles will then make it onto dealers’ lots, expanding used selection.

“In addition to offering a wider variety of vehicles, automakers will continue to increase new car production to grow sales and share, while the used car market will see a surge in off-lease vehicles and older trade-ins,” Plache explained.

And growing inventories, both new and used, “will appeal to the deal-seeking mentality prevalent since the recession,” Plache added.

With  the influx of off-lease vehicles and inventory, used prices are expected to continue to lower — another boon for the price-conscious shopper.

And dealers may want to watch out for a shift in the way consumers are financing cars, as well.

“In general, more car buyers will arrange funding through dealers, with leases and dealer-financing supporting over three-quarters of transactions as the share of sales from other funding sources, such as cash and loans from third party lenders, declines further,” Plache said.

Plache warned that buyers may also be less tolerant of long negotiation processes “preferring instead to lock in the price and as many other terms of the deal as possible before arriving.”

To see the original blog post and more from Edmunds.com analysts, visit here. 
 

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