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Economy is flat, but Americans still need cars and trucks

September 2, 2011
By Mark Scarpelli, Chicago Metro NADA Director
If you’ve been paying attention to the news lately you have every reason to be more than a little confused.
One day the headlines tell us our economic recovery has hit a rough patch, causing consumers to pull back on “big ticket” purchases like cars and trucks. And the next day we’re hearing the auto industry is driving our nation’s economic revival, as manufacturers ramp up production and dealers start reinvesting in their facilities and hiring more employees.
President Obama is even looking to the auto industry for advice on how to spur hiring in other industries. He recently called Ford CEO Alan Mulally to discuss supply chain disruptions caused by the earthquake and tsunami in Japan and ways to stimulate exports and create jobs.
And just when we thought the stock market’s roller coaster ride was going to rattle consumer confidence even more, the Commerce Department reported that orders for autos and auto parts jumped 11.5 percent in July, the most in eight years.
In other words, the economy might be sputtering along, but Americans still need cars and trucks to get to work. And with the average age of cars and light trucks at 10.6 years, manufacturer incentives increasing this fall and more available inventory, new-car sales should only increase in the last four months of the year, says NADA chief economist Paul Taylor.
“When consumers discover that the economy is still growing in the United States and Europe, although slowly, consumer confidence will improve,” Taylor said.
Unlike several analysts who reduced their sales forecasts for 2011 as a result of economic conditions, the NADA is sticking to its projection of 12.9 million light-vehicle sales nationally by year’s end, which would put us about 12 percent above the 11.5 million units we sold in 2010.
Taylor expects new-vehicle inventories to return to reasonable levels in September, which will provide car shoppers with more choices. “Auto loan rates for new cars will remain attractive this fall as a result of meager economic growth,” Taylor said. And depending on what happens on Wall Street, luxury car sales will either increase or decrease in the coming months.
In times of economic uncertainty, it’s best to take the longer view. That’s what the NADA does with its sales forecasts despite the “sky-is-falling” headlines.
In legislative and regulatory news . . .
The Federal Trade Commission recently issued an “Alert” reminding consumers of several issues in connection with automobile warranties. The Alert explains what a warranty is and provides guidelines to consumers about warranty repairs, including a reminder that a consumer is not required to “use the dealer” for warranty repairs. The Alert also provides links for consumers to obtain further information. To read the FTC Consumer Alert, visit  
Now Playing on NADA-TV:
• “AutoFocus with David Hyatt” Brad Miller, NADA assistant director of Legal and Regulatory Affairs, discusses the recent changes to Adverse Action Notice Requirements.
• “Benefits of Indirect Lending” The NADA and the American Financial Services Association meet in Washington to discuss educating regulators about the indirect financing model and other current issues.
To view these videos, visit the NADA-TV channel on by clicking on the link in the upper right corner of the home page.
In other NADA news . . .
• The U.S. Chamber of Commerce is seeking nominations for its first “Hiring Our Heroes” award from businesses across the country—including new-car dealerships—that are taking active leadership roles in employing U.S. military veterans and their spouses.
To apply for the award a dealership must currently employ at least one person who is a veteran. There are five award categories: 1) Veteran and Military Spouse Employment (General Award); 2) Veteran and Military Spouse Employment (Small Business Award); 3) Wounded Warrior Transition Assistance; 4) Providing Employment or Internships for Post 9-11 Veterans; and 5) Women Veteran Employment. Award finalists and winners will be recognized at the Chamber’s fourth annual “Hiring our Heroes” event and awards dinner in Washington on Nov. 10. Nominations are due Sept. 23 by 11 a.m. CDT. For more information, visit or email  
• There now are more ways than ever to “connect” with the 2012 NADA/ATD Convention and Expo, Feb. 3-6 in Las Vegas. “Like” the convention’s Facebook page and follow us on Twitter to receive instant updates on speakers, registration, exhibitors, hotels and more. Plus, stay tuned for the NADA’s new smart phone app, coming this fall, which will put the entire convention at your fingertips. And MyNADAPlannercan help you to select workshops, note times of franchise meetings, and more. Convention registration is underway at