Transaction Prices Reach Record High as New-Vehicle Sales Improve in the First Half of 2014
By: Jeff Youngs, 7/1/2014
Credit availability allowing for longer-term loans is driving a significant increase in new-vehicle sales. Total new-vehicle retail sales in the United States are expected to reach 6.5 million for the first half of 2014, an increase of 6% over the first half of 2013, according to an analysis by J.D. Power.
Data collected by the Power Information Network(R) (PIN) from J.D. Power show a sales increase, on a year-over-year basis, in each of the first six months of 2014--despite one of the longest and coldest winters on record.
Meanwhile, a sales forecast developed jointly by J.D. Power and LMC Automotive predicts that total sales (including sales to fleet buyers) through the first half of 2014 are expected to reach 8.1 million--an increase of 4% over the same period in 2013.
"New-vehicle demand in the first half of 2014 has been robust, as evidenced by both strong sales and record transaction prices," said Thomas King, vice president of PIN. "Looking forward, we expect that strong sales momentum to carry into the second half of the year."
Transaction Prices Reach Record High
Transaction prices for the first six months of 2014 are at record levels, too, averaging $29,630--an increase from $28,880 a year ago. Consumer expenditures on new vehicles through the first half of the year stand at a record high of $194 billion, up from $180 billion in the same period in 2013.
A possible contributor to these higher numbers is the fact that automakers and lenders are offering longer-term loan options. Loans with terms of at least 72 months account for 31.8% of retail sales in the first half of 2104, up from 30.2% in 2013. Cash transactions account for 18.1% of all retail vehicle sales, down from 18.5 in the first six months of 2013. However, the percentage of financed sales is down in the first half of 2014--55.9%, compared with 57.8% in the first half of 2013. These developments are attributable to the fact that leasing now accounts for 26% of retail sales, compared with 23.8% for the first half of 2013.