Consumer mindset changing for auto purchases
August 5, 2014
Americans flocked to car dealerships in droves this summer, fueling automobile sales for Chrysler, Ford, General Motors and Nissan in July. According to a news release from Kurt McNeil, the U.S. sales executive at GM, both the nation's economy and the largest domestic automaker exited July carrying robust momentum into August.
SUVs were popular among car shoppers in July.
"The economy has bounced back strongly from the harsh winter, consumer confidence has reached a post-recession high, energy prices remain moderate and job growth continues,” McNeil said. “The stage is set for strong sales through the balance of the year.”
MarketWatch reported that automobile sales in June exceeded initial forecasts from analysts and industry insiders, which made them bullish on July sales and the rest of the year.
Adam Jonas, an analyst with Morgan Stanley, told the Los Angeles Times the frame of mind among potential car buyers has changed.
“The U.S. auto cycle has clearly moved from a 'need to buy,' to an 'I just want to buy' type of consumer mindset,” Jonas said.
Robust demand for its sport-utility vehicle lineup gave Toyota a 12 percent increase in July sales from the previous year. Ford noticed a similar surge, as sport utilities sold at a 9.5 percent better clip than in 2013, keeping delivery estimates headed for the best year since 2006.
MarketWatch said Toyota sales increased behind the best month ever from its RAV4 compact utility. Meanwhile, sales of Ford's Escape SUV increased 19 percent to the company's best July ever. Ford reported that it sold 211,467 light vehicles in July.
Jeff Schuster, an analyst with LMC Automotive, spoke to MarketWatch about the of rapidly rising SUV sales in July.
“The on-again, off-again relationship is back on and the love affair goes on,” Schuster said. “It shows that consumers are feeling good about the position of the economy. Combine that with some new products and relatively low fuel prices and the magic takes over.”
Chrysler also had a month in the sun thanks to strong SUV sales. Its Jeep lineup posted a record July as it pumped up sales by a whopping 41 percent.
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Younger buyers are starting to get back into the market
According to a report from J.D. Power & Associates, millennial consumers, also known as Generation Y, are starting to ease back
into the car-buying mode. Millennials—those born between 1977 and 1994, according to J.D. Power—made up 26 percent of new-vehicle retail sales during the first six months of 2014. That's a two percent increase from the first half of 2013, according to J.D. Power.
“As Gen Y consumers enter new life stages, earn higher incomes and grow their families, their ability and desire to acquire new vehicles is increasing,” said Thomas King, J.D. Power vice president.
The report stated that sales among millennials during the opening two quarters of 2014 marked the first time the group passed Generation X—those born from 1965 to 1976—in vehicle purchases. Generation X buyers accounted for 24 percent of new car sales during the first half of 2014. Meanwhile, Baby Boomers—born from 1946 to 1964—still made up the largest group of vehicle buyers. Baby Boomers accounted for 38 percent of sales during the first six months of 2014.