Getting To The Bottom Of August’s Rapid Cars Sales

Step-by-step-to-Selling-a-CarAccording to recent sales data, consumers in the United States bought cars more quickly in August of this year than they have in the past six years. Toyota sold 23% more vehicles than they did during the same time period last year, General Motors sold 15% more and Ford and Chrysler both sold 12% more. We asked Zintro experts specializing in automotive sales to explain the boost in consumer confidence and discuss how the trend might play out.

Daron Gifford, an automotive industry executive, explains that “automotive sales were severely depressed in the from 2008 through 2010, [dropping to] levels not seen in decades. As a result, we have a cycle wherein there are a large number of buyers with aging vehicles (average is over 11 years now), and increasing financial confidence with a relatively stable and growing economy. Consequently, these key drivers of pent-up demand and more income are showing themselves in these sales increases. Since it will take awhile for the pent-up demand to play out, there is higher confidence that these sales volumes are also sustainable for the next few years.”

According to Dave Barons, an automotive leasing and residual value determination expert, “such an increase can be influenced by several factors [and] cannot be dismissed as simply consumers buying more cars. One must first determine if there is an oversupply of new cars, as there traditionally is in August, and what incentives (rebates and low finance and lease programs) were offered by the manufacturers during the month as compared to the previous year.”

Another factor to take into consideration “is the supply of late model used cars and the strength of that market. If there was a large supply of off lease and rental cars a year ago, this condition can tap into the New Car market; [while] if the supply of used cars is low and their values are high, this will increase the demand for new cars. Finally, one must compare the new car model offerings year over year to see if there was a hot new item that triggered August’s successes with each of the brands and their models. Once the data from these related factors is analyzed, one can better determine if the economy has triggered the increase or if it was a combination of the economy, consumer confidence and the items mentioned above.”

Jon Glickman is an automobile marketing and sales growth specialist. Based on his “current experience consulting with Ford, GM and import stores,” Glickman feels “there are three significant factors that caused the increase in new vehicle sales volume in August. First: pent-up demand. People are driving their vehicles longer but they are ready to move up to a new vehicle whenever they perceive the time is right. Some have waited as long as they can without spending serious money for repairs and upkeep on their present vehicle or risking breakdowns.”

The second factor is “year end rebates, finance deals and loyalty incentives that make the customer perceive savings as greater than they were in the past.” Lastly, “trade-in allowances are better because the used car market demand for older vehicles is up. Franchised dealers have averaged selling 38% of their retail used cars in vehicles that are 10 to 12 years old. This would have never happened in the pre 2009 era.”

By Gabriela Meller

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