Total vehicle sales are expected to increase for the month of April, as Americans look to replace their aging cars and trucks with newer, more fuel-efficient rides.
Along with pent-up demand, increased consumer confidence and decreased unemployment, car company incentives will drive the auto industry to its sixth straight month of powerful growth.
Economists, surveyed by Bloomberg, forecasted average sales of 14.32 million annually adjusted vehicles, but some are more optimistic, much more optimistic.
“The expectation is that April will be the best month in about four years,” said Bernard Baumohl, chief economist of the Economic Outlook Group. He expects sales to rise because the economy, as a whole, has improved; consumers now have more confidence. “Now that the economy has turned a corner there is an incentive for people to replace their vehicles.”
The average age of cars on the road in America is a record 11 years, said Baumohl. And now that more Americans are working, there is extra income to make purchases. These factors will bolster the auto industry against dismal first quarter GDP growth numbers and the poorer than expected March jobs report. Baumohl, who wrote the book on economic indicators, would not be surprised if the industry sells 14.5 million vehicles in April.
Declining gas prices is yet another factor that will free up income for strapped American consumers, and the economy as a whole. Polk, an automotive research and consulting company in Michigan, recently revised its sales forecast for the year to 14.3 million light vehicles, a jump up from 13.7.
“I do think that if gas prices soften, as they appear to, it will help the industry. It will also help the economy,” said Tom Libby, a senior auto analyst with the firm. “We’ve had four or five months of strong sales, so there don’t appear to be any reasons [April] will be a let down.”
Libby refused to make a prediction but, like Baumohl, said that poorer than expected economic indicators will not hamper the auto industry.
“We have no reason to be pessimistic,” he added.