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Aged cars plus more inventory plus lower gas prices equals more sales: NADA

May 11, 2012
While automakers reported mixed results for U.S. new-car and light-truck sales in April, the chief economist of the National Automobile Dealers Association highlighted several factors that are expected to boost sales over the next several months.
Paul Taylor said, “Modest economic growth and declining gasoline prices, low interest rates, more leasing options and aging vehicles that need to be replaced will likely result in higher auto sales over the next several months.”
The average price for regular gasoline at the end of April had fallen to $3.83 a gallon nationwide, about 11 cents lower than late March, according to AAA.
“If the trend of falling gasoline prices continues as expected, lower gasoline prices will be a key contributor to sales increases in both the new- and used-vehicle markets,” Taylor said.
“Lower gas prices will act much like a tax decrease, putting more money in the pockets of consumers.”
Taylor predicts U.S. new-car and light-truck sales will increase by more than 10 percent in 2012 as the new-vehicle supply increases.
“As inventory levels of small and midsized cars with four-cylinder engines return to normal after the production bottlenecks in the U.S. and Asia,” Taylor said, “new-car sales will likely increase in future months.
“Light-truck sales will see a comeback during the second quarter. Falling gasoline prices—assuming there are no oil disruptions in the Middle East—will increase demand for both new and used sport-utility vehicles, crossover-utility vehicles, minivans and pickup trucks.”
Taylor said May’s sales results will indicate where the auto industry is headed for the rest of the year as the inventory mix of new cars and light trucks is fully restocked at dealerships.
Another factor expected to boost new-car sales is higher than average trade-in values on used vehicles. Used-car prices continued to rise in recent months, which have increased the trade-in values for consumers shopping for another vehicle.