A new year has begun, and predictions for a prosperous year for the country's new- and used-car markets are pouring in. Factors such as increases in available trade-ins and high demand are expected to boost used sales, while numerous redesigns may ramp up the new market.
According to a study released from Indian firm Ken Research titled, “The US Used Car Market Outlook 2016 - Driven by Late Model Used Cars,” the nation’s used-car market revenue is expected to reach close to $480 billion by 2016.
Providing some background to these numbers, officials pointed out that in 2006, as the economy began to slow down, used market revenue came in at $340 billion and grew less than 1 percent during 2006–2011.
What is pushing this expected boost?
The report cited the “high average prices of used cars” as the main factor behind this growth.
“Average prices of used cars, price of gasoline and diesel, improvement in the access to F&I services, increased sales of new cars which will ensure the availability of late-model used cars, consumer confidence will drive the U.S. used-car market in the future,” the firm’s research analysts further explained.
The company also predicted that hybrid used vehicles will continue to gain market share.
And with new light vehicle registrations in the U.S. in 2013 expected to rise 6.6 percent over 2012 levels to 15.3 million vehicles, according to Polk, a boost in trade-in rates may bode well for the used market, as well.
“Used-car sales and new-car sales are complementary in nature, if the prices of one incline the other kind will also follow suit. Sales of new cars will determine the size of future used car inventory,” Ken Research shared.
Breaking down Polk’s analysis in greater detail, the company also expects production rates to jump, increasing to the 15.9 million unit range (an anticipated 2.4 percent increase from 2012), driven by an improving economy and capacity expansion in the region.
In fact, consumers and dealers in the U.S. may be on board for an exciting year in the automotive world. According to Polk, new-vehicle introductions in 2013 will increase significantly, with 43 new vehicle introductions in the U.S. planned for the year, up nearly 50 percent over 2012 levels.
Moreover, over 60 vehicle redesigns are expected to hit the lots in 2013, according to Polk.
“Polk expects continued recovery in the industry in 2013 and 2014, a positive sign for the U.S. economy,” said Anthony Pratt, director of forecasting for the Americas at Polk.
“The auto sector is likely to continue to be one of the key sectors that lead the U.S. economic recovery, however, we don't expect to realize pre-recession levels in the 17 million vehicles range for many years. However, our baseline forecast hinges on Washington's ability to draft a budget plan that will avoid $600 billion in spending cuts and tax increases,” he continued, noting decisions in Washington may play a key role in how the automotive industry continued recovery pans out.
Polk also is predicting that the U.S. automotive market will return to pre-recession production rates by 2016. The company shared it expects a return to 16 million units in the U.S. by 2015 at the latest, a rate last achieved in 2007.
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