Earthquake, Gas Prices Could Set Back New Car Sales
Car trend research firm Polk noted last fall that the average new car owner kept a new model for 63.9 months -- up 4.5 months from the same time a year earlier. Several factors played into this trend, including consumer austerity driven by the recession, the prevalence of longer-term car loans, and better-made cars.
The National Automobile Dealers Association (NADA) says that the hike in gas prices has pushed people to buy used cars. That trend could gain momentum if there are fewer new models to choose from. Jonathan Banks, an analyst for the organization, said that both a slowdown in manufacturing and high fuel prices has caused consumers to shop used versions of cars like the Prius. He sees a potential increase in this activity as parts shortages grow.
If consumers again delay the purchase of new cars, this could put auto manufacturers through another challenging period like the one they went through in 2008 and early 2009. U.S. sales of cars and light trucks hit over 16 million in 2006. By 2009, however, that figure had dropped below 10 million. Car manufacturers expect American sales to run over 12 million units this year. Manufacturers have cut their overall labor costs and factory production enough so that at the 12-million-unit level most should make money. But 12 million may be a stretch if high gas prices and parts shortages become long-term problems for consumers.