Auto Dealers Are Upbeat on U.S. Sales for 2011

Sales of cars and trucks in the U.S. are expected to surpass last year's levels by double-digit percentages, with expectations that automakers will sell nearly 13 million vehicles in 2011, the nation's leading trade association for automobile dealers said Friday.

Capping an improved 2010, which saw sales rise to about 11.6 million for the year, the National Automobile Dealers Association said it expects sales this year to climb 12% to 12.9 million units due to loosening credit, a rising stock market and other factors.

"The auto industry is coming back strong from what has been a difficult economy," NADA Chief Economist Paul Taylor said in a statement. "Auto sales are playing a key role in leading the economic recovery."

Increasing Competition Is Good for Business

Pent-up demand is one reason sales will improve this year, Taylor said. With American vehicles averaging more than 10 years old, many consumers will soon need to replace aging cars and trucks.

A greater variety of car and truck choices is also cited as a reason for improved sales this year. Increased competition within the auto industry is forcing car makers to introduce new models and revamp existing ones more often to keep up with emerging technology and styling trends.

That's especially true among electric and hybrid vehicles, which more automakers are turning to as a way to meet new stringent standards that govern fuel economy and greenhouse gas emissions and are set to begin taking effect in 2012. What's more, the rising cost of gasoline, with expectations that prices could soon exceed $3.50 a gallon, is likely to increase consumer interest in smaller cars, hybrids and diesels.

Only Modest Increases in Loan Rates

An increased availability of credit is also helping more Americans buy cars, Taylor said. The Federal Reserve's current stance on maintaining historically low interest rates means finance companies can continue to offer attractive financing rates on new-car loans, further helping to accelerate sales of cars and trucks in 2011.

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"Concern about federal budget deficits and long-term inflation may contribute to higher 30-year fixed rate mortgage rates," Taylor said. "But loan rates for car loans four to six years long are likely to see only modest increases over the next year as the economy grows."

NADA also sees the recent run-up in stock prices helping to boost sales of luxury cars this year. Equities are at their highest levels in more than two years, and continued gains could help push sales of luxury vehicles even higher, the group said.

NADA issued the comments just ahead of the North American International Auto Show in Detroit, which begins press previews next week. You can follow all the latest news from the show at DailyFinance's sister site, AOL Auto's autoblog.