As Congress hammered out an overdue budget deal that averted the much-discussed fiscal cliff — but kicked the can down the street on larger reforms — it's important to note that auto sales played a huge role in propelling the U.S. economy through 2012.
The auto industry regularly accounts for around 3% of the gross domestic product, according to Michigan's Center for Automotive Research. And that industry is growing. Analysts surveyed by Bloomberg News expect new-car sales in 2012 to hit 14.5 million, representing around a 13.5% gain over 2011. That means 2012 marks the third year auto sales have seen a double-digit percentage growth and is the best year for car sales since 2007.
Last year "would have looked considerably weaker" without any growth in car sales, The Washington Post notes; financial powerhouse Credit Suisse said auto sales drove 30% of all economic growth in the first six months of 2012. This came despite 14.3 million vehicle recalls, with more than half from Toyota and Honda. Why? The Washington Post theorized that pent-up demand overcame any buyer reticence related to the recalls, as the median age of cars on the road started the year at 10.8 years — an all-time high.We reported last January that 2012 could be the year of the U.S. auto industry. As year-end results approach, it may well have been — and the tide could continue for 2013. CNW Marketing Research called 16 million sales in 2013 "extremely possible" as drivers finish paying off nearly 10 million new cars purchased since 2005. Nearly half of those CNW surveyed said they would buy another car after their old car payments ended within 12 months; an averted fiscal cliff should help.
It all starts with Wednesday’s sales results — a "better indicator than employment" numbers for the overall health of the auto industry, CAR analyst Yen Chen told us. Those sales should be strong. CNW reported just before Christmas that approval rates for shoppers with lower credit had improved 43% for the month. New-car leases are up, and used-car sales are looking to hit their best year since 2007. All of those suggest a good month, so stay tuned for Wednesday’s results.