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Car Buyers' Spending May Hit All-Time Record for December

By    |   Monday, 30 December 2013 06:48 AM

Despite a slow start for new car sales earlier this month spending, could hit an all-time high for December says a sales forecast from J.D. Power and LMC Automotive.

The weakness seen in early December can be attributed to sales pulled ahead in November and winter storms keeping consumers out of showrooms, Jeff Schuster, senior vice president of forecasting at LMC Automotive explains.

But, sales "have rebounded well, and the year ahead is set up to edge new vehicle sales closer to pre-recession levels," he adds.

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According to the monthly forecast, total vehicle sales are expected to be up at least 4 percent year over year, and consumers are expected to spend more than $34 billion for new vehicles this month.

That's not just a reflection of volume, but also of record transaction prices, the J.D. Power and LMC Automotive forecast notes.

According to their projections, total light vehicle sales are likely to reach 1.4 million units in December and 15.6 million units for 2013.

And industry experts are not expecting the strong appetite for vehicles to dwindle in the new year.

"The budget deal in Washington is helping fuel a higher level of optimism for the economy and auto sales in 2014," Schuster notes.

LMC Automotive has increased both its total and retail light vehicle sales forecasts for 2014 by 100,000 each, to 16.2 million and 13.3 million units, respectively.

Car shopping and information website Edmunds.com expects new car sales to hit about 15.5 million this year. And it also notes that the auto industry is on track to reach its highest annual sales performance in 2014, selling 16.4 million vehicles.

"The average age of all light vehicles on the road climbed to 11.4 years in 2013, and an aging fleet will continue to force buyers back to the market next year. With used car prices still elevated over past norms and used car supply still tight, the new car market will remain attractive to many of these buyers," Edmunds.com Chief Economist Lacey Plache explains.

But Plache says 6 percent sales growth next year isn't as "rosy" as it may seem. It would mark the "slowest year-to-year growth since auto sales bottomed out in 2009."

"The economy has not yet improved enough for recovery to widely reach the groups hardest hit by the recession, including young people, lower-income households and small businesses," notes Plache. "Even though auto sales from these groups have improved from recession lows, their participation in the recovery still lags the rest of the market."

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Despite a slow start for new car sales earlier this month spending, could hit an all-time high for December says a sales forecast from J.D. Power and LMC Automotive.
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Monday, 30 December 2013 06:48 AM
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