Automakers are expected to post modest sales increases for new automobiles for the month of April, continuing a trend of moderate growth since the year began.
Economists estimate that sales this year will exceed 15 million vehicles, surpassing the 15 million units sold in 2012 and the 13 million sold in 2011, according to data from Ward’s Auto.
Sales are being driven by sustained improvements in the housing market since the recession ended as well as the need and desire of many Americans to replace their aging cars, which are on average the oldest they have been in decades. Home prices rose 9.3 percent for the twelve-month period ending in February, according data from S&P Case-Schiller indices.
“I think that underlying tendency will continue,” said Bob Stein, economist at First Trust Advisers.
Stein said that he expected automakers to sell 15.5 million vehicles at an annualized rate this year and 16.5 next year. Both predictions are less than the pre-recession peak of 17.5 million vehicles, according to data from Ward’s Auto. Stein said that his forecast was based on the fact that the economy has been recovering but doing so at a somewhat anemic pace, and that he doesn’t see much potential for greater improvements.
“We’re not far from where we are likely to peak,” he said.
Growth in the auto market has continued steadily since the end of 2012 despite worries that the market would be depressed by increases in income and payroll taxes as well as by recent federal budget cuts known as sequestration.
“It’s been odd that we haven’t seen that,” said Mike Englund, chief economist of Action Economics.
Englund also said that cold weather in February and March led to higher utility bills that may have temporarily dissuaded lower-income consumers, who would have received those bills weeks after turning up the thermostat, from replacing their old cars and trucks in April.
“We may find that there will be some catch-up,” said Englund who added that he was still optimistic that growth would remain positive this year, averaging a 5-10% increase per quarter for the next five to six quarters.
Trucks have led sales in previous months and were expected to do so again in April. This is partially due to the use of vehicles like the Ford F-Series pickup by construction firms and homebuilders, but also due to the aesthetic tastes of Americans, who have favored pickups, SUVs and crossovers over cars since the turn of the millennium.
“Americans have an appetite for larger vehicles. That’s how we roll,” said Stein.