U.S. February auto sales rose approximately 8%, compared to February 2015, representing the best monthly sales in 15 years according to Edmunds.com. February sales were bolstered by purchases delayed from January (due to severe weather in much of the country), as well as President’s Day sales.
Increased consumer confidence, lower gasoline prices, low-interest rates and higher wages have all played a part in the continued strong auto sales. Analysts, for the past few months, have been voicing concerns about a cyclical fall-off in vehicle sales, after seven years of sustained gains since the 2008-2009 deep recession, but there are currently no signs of a slowdown in vehicle demand.
Lower gasoline prices continued to drive sales of pickups and SUVs, causing automakers to raise incentives on cars to keep inventories at manageable levels. J.D. Power said cars accounted for just 42% of vehicle sales last month, the lowest in any February on record.The seasonally adjusted, annualized selling rate (SAAR) for February was 17.7 million vehicles, up from 17.6 million in January and 16.4 million a year ago.
Longer loan terms and leasing
Longer loans and leases accounted for 65.1% of all retail sales in February, up from 64.3% in January, according to J.D. Power. The company also said consumers spent more than $32 billion on new vehicles in February, which represented a monthly record and $3 billion more than February 2015.
Franchised Dealers Sell Record Number Of Used Vehicles In 2015
Last year, franchised dealers sold a record 11.4 million vehicles (including nearly 2.6 million certified pre-owned), according to Edmunds.com’s 2015 Used Vehicle Market Report. Used vehicle prices also hit an average price of $18,600 last month.
The report says the increase in used vehicle sales is a direct result of the popularity of leasing over the past few years. A record number of lease terminations are expected in 2016.
Millennials’ Growing Clout Shifts Buying Habits, Lending
Millennials’ have increased their share of auto loan originations in the past year. But as a demographic, millennials’ have different buying behaviors than older generations, and the industry has to adjust to their mindset. Millennials’, defined as consumers aged 18 to 34, made up 35% of loan originations in 2015, and their share will continue to grow, said Jason Barrie, vice president of market performance and F&I solutions at Dealertrack. Overall, millennials’ represent over 83.1 million American consumers, or more than a quarter of the nation’s population.