New car sales could hit 16.9 million units in 2015, according to Kelley Blue Book. Cox Automotive, in its 2105 Manheim Used Car Market Report, shared other statistics:
42 million — Number of used cars sold in 2014, virtually unchanged from 2013
11 years — Average lifespan of a car (owned by one or more drivers)
$32,000 — Average cost of a new vehicle
60 percent — Rise in new vehicle sales from the trough of 10.4 million in 2009 to 16.5 million last year
*Cox Automotive is owned by Cox Enterprises, which also owns the Atlanta Journal-Constitution.
The buzz at this year’s Atlanta International Auto Show, which wraps up Sunday, has been on self-driving cars, dashboards that talk and, if some Georgia Tech research proves successful, technology that may one day find a parking space for you.
But the industry storyline these days is less about new-fangled tech than old-fashioned sales. Automakers expect to sell 16.9 million new vehicles in 2015, just shy of the sales record of 17.4 million in 2000.
Why is this important beyond the automakers and dealers who directly benefit? Because surging car sales are a bellwether of consumer spending — which makes up about two-thirds of the American economy. The prospect of matching a 15-year-old peak is seen as an indicator that the nation’s financial health is back.
“When auto sales are rising that is a sign that consumers are feeling confident again,” Kennesaw State University economist Roger Tutterow said. “That is important because durable consumer goods are more cyclical than non-durable goods.”
The sales surge comes despite little improvement in Americans’ paychecks. While the stock market has enjoyed a long upward run, unemployment has fallen and national GDP outpaces most Western countries, consumers are not seeing it in their pocketbooks.
“Higher employment has not led to higher real wages,” Tom Webb, chief economist at Cox Automotive, wrote in the company’s 2015 Manheim Used Car Market Report. “Average hourly earnings have been growing at only slightly more than 2 percent. “
Cox Automotive and Manheim are owned by Cox Enterprises, which also owns the Atlanta Journal-Constitution.
The rise in new vehicle sales — which are enjoying their fifth consecutive year of increases, according to Cox Automotive — is being driven by demand to replace older vehicles and lower gas prices that are pushing buyers back to the SUVs and trucks they abandoned during the recession, experts said.
Excitement over new trends in auto technology helps.
An aging fleet
“The fleet on the road on average is 11.7 years old, up from 9.7 years in 2006, … so there is a high replacement demand,” said Tim Kelleher, zone manager for Ford’s Atlanta region. He said Ford thinks the industry could see sales of 17.5 million vehicles in 2015.
There are reasons not to be over-exuberant. Used vehicle sales, which make up the majority of cars sold, moved about 42 million units in 2014, but failed to eclipse the record 44 million set in 2005. After riding a hot streak for several years, the market is cooling into a more stable number, Webb said.
New car prices, which have reached an average of $32,000, increasingly are beyond reach for all but high-end consumers, the experts said. Lenders are extending the length of some loans to 72 and 84 months to accommodate higher prices.
Repossessions also are on the rise, the Cox report noted, gaining 8 percent in 2014 to about 1.48 million vehicles. Those numbers will likely keep rising, Webb wrote, because of more outstanding contracts and a shift toward lower credit tiers.
Another concern: Millennials, roughly ages 18 to 33, are putting off buying a car later than previous generations because of high student debt, a preference for public transportation and the substitution of mobile phones for the socialization that others got from vehicle ownership.
Auto experts said that’s where investment in cool car technology, from self-driving mechanisms to integrated systems such as Apple’s Siri, can help. It makes cars more about the bells and whistles than just getting from point A to point B.
Matt Pearman, 22, said he wasn’t in the market for a car but went to the Georgia World Congress Center last week anyway to window shop at the Auto Show. Pearman, of Douglasville, has a Honda Civic sedan and said most of his friends have cars too.
“They may not be brand new, but we all have them,” he said.
Easy entry and exit
The car show also drew Phyllis Panuska, of Buford, who was looking at SUVs that she could get easily get in and out of. Panuska, who drives a Chrysler 200 convertible, said the Auto Show provided a space for her to get behind the wheel of several brands. She climbed into a Hyundai, Subaru, Honda and Kia, all under one roof.
Billy Hayes, vice president of sales operations for Southeast Toyota Distributors, said automakers are offering a wider range of models to appeal to buyers’ diverse circumstances. Sales for Southeast Toyota in metro Atlanta are up 22 percent year over year, a number he thinks will be aided by a new Toyota Tacoma pickup coming out later this year.
Schools such as Georgia Tech could play a role in helping auto sales growth. Tech is working with Ford on a technology experiment that would use sensors to find parking spaces and send the information to the cloud for motorists to use.
Among the challenges of the technology is being able to determine the size of a space in a parallel parking opening on a street because one size does not fit all vehicles, said Claire Bergman, a computer science graduate student working on the experiment at Tech.
The school also is looking at cars that could be driven remotely with a phone, opening up a world of concierge services that could, for instance, allow a rented vehicle to be dropped off anywhere and have the car driven back from a different location over the wi-fi network.
“Or, if you suddenly are not feeling well, hit the button and someone takes over driving on the highway for you until you feel better and can take over again,” Georgia Tech professor Bert Bras said in describing another use for the technology. “That’s kind of the vision.”
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