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Car sales are kicking into top gear

September 16, 2014

August is typically a hot month for retail revenue as families across the country hit stores for back-to-school shopping. This August is also shaping up to be a strong month for sales in another sector.

According to a joint monthly sales forecast from J.D. Power and LMC Automotive, total sales of new vehicles appears to be on pace to pass May for the highest rate of sales in 2014. Total light-vehicle sales are expected to reach nearly 1.5 million units in August, which would be a 3 percent increase compared to the same month last year.

Car sales are surging throughout the nation.

John Humphrey, senior vice president of the global automotive practice at J.D. Power, claimed the high levels of consumer spending on new vehicles indicates the growing health of the auto industry.

“We expect consumer spending on new vehicles in August to approach $39 billion, the highest level on record for the month of August and second-highest month ever behind July 2005 ($39.7 billion),” Humphrey said. “The record consumer spending is fueled by both high sales volumes and high transaction prices.”

Expectations are high, as the seasonally adjusted annualized rate for retail sales in August should hit approximately 13.6 million units. That's an increase of more than 100,000 units from the selling rate in the previous month. The seasonally adjusted annualized rate in August is expected to be the sixth straight month where the rate has surpassed 13 million.

What should new buyers know?

With sales expectations so high, a new batch of first-time buyers is likely helping push up the forecast. But buying a car for the first time can be a trying experience, so first-time car buyers should try to remember a few tips before pulling the trigger on a purchase.

When it comes to auto insurance, it's important to know what is being paid for. What is included in the insurance? What type of coverage does the plan provide? Comb through the policy and talk to an insurance agent before agreeing to terms.

It's also crucial to avoid overpaying for insurance. When you buy a new vehicle, the insurance value will be the purchase price. As you own and drive your car, the vehicle will begin to depreciate and your insurance value should be reduced. This is a component that many people often disregard, according to Yahoo.

Prospective car buyers gearing to make a purchase should look into the offerings from SelectQuote Auto & Home. SelectQuote provides drivers with a comparison shopping tool using a dozen of the nation's blue-chip insurers. This makes it easy for you to find the right policy for your vehicle.

Sales are headed up

LMC Automotive has lofty expectations for auto sales through the end of 2014. The company believes auto sales should reach 16.3 million units for total-light vehicle sales, a 5 percent increase from 2013.

“As a very robust summer selling season winds down, optimism continues in the auto industry for the remainder of 2014, with expectations of economic growth beginning to catch up to the growth in autos,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “As we look at scenarios for 2015 light-vehicle sales, external factors, including global conflicts and capital flight from emerging markets, account for the majority of the risk to further and expected growth in the U.S.”

One reason for the optimism has been the reduced factory shutdowns in North American light-vehicle production. Factories in the U.S., Canada and Mexico produced 1.2 million vehicles in June, a 17 percent increase from the same month the year prior.