WASHINGTON (1/7/15)--Despite a small step back, automobile sales in December rounded out 2014 with a strong pace of 16.9 million annualized units sold, representing a 9% improvement year-over-year (Economy.com Jan. 5).
Sales in December fell just below November's pace of 17.2 million units. The decline was largely driven by a drop in light-truck sales, which had flourished the month prior, according to numbers from AutoData Corp.
"The combination of a strengthening labor market, improving credit quality and access to credit bolstered by low-interest rates, ample discounting, the launch of new models and plummeting gasoline prices contributed to the strong performance at year-end and for the year," said Sophia Koropeckyj, Moody's analyst (Economy.com).
Auto-loan activity at the nation's credit unions reflects the healthy vehicle market seen in the United States of late, as new-auto loan growth climbed 1.3% in November, while used-auto loans rose 0.5% for the month, according to monthly estimates from the Credit Union National Association.
"An improving economy with more jobs and higher wages has members opening their wallets," said Mike Schenk, CUNA vice president of economics and statistics. "Collectively, members are increasingly comfortable with big-ticket purchases. This is reflected in continuing fast growth in credit union loan portfolios."
Despite low gas prices, light-truck sales didn't continue their hot streak from November, falling to 8.8 million units sold annualized from 9 million in November. Though they still had their best year since 2006, according to Moody's.
Car sales, meanwhile, posted their best year since 2002, with 7.9 million units sold annualized--a 1.6% improvement from 2013's pace.
"Consumers have been purchasing plenty of high-fuel-efficiency vehicles, especially as skittish dealers worked to ensure continued sales with generous incentives," Koropeckyj said. "The lower gasoline prices have served almost as a tax cut, providing households with more disposable income to spend on any type of vehicle."
Moody's analysts expect car sales to continue to make gains in 2015, with a forecast of 16.8 million units sold for the year, up from 16.5 million this year. Though analysts also say sales will fall back to current levels in 2016.
"The big gains in vehicle sales have already taken place and the pent-up demand, which propelled sales forward in recent years, is close to being absorbed," Koropeckyj said.