Pub. 11 2012-2013 Issue 4

N e w J e r s e y C o a l i t i o n O f A u t o m o t i v e R e t a i l e r s 25 new jersey auto retailer w w w . n j c a r . o r g ONE MILLION  continued on page 27 T he year 2012 turned out to be an excellent year for growth in new car sales, even as it proved to be a year of somewhat slow growth in the overall economy. New light vehicle sales were 14.4 million units, low compared to the past decade when sales over 16 million were the norm, and even eclipsed 17 million in 2000 and 2001. This year sales will likely eclipse 15.4 million units. In 2014, the difficult task begins to lift sales above 16 million units, with the ultimate goal to see sales above 17 million again. Our country, although growing slowly, has regained the level of wealth achieved in 2007, and then lost during the recession. The country also continues to gain population as well. When we look back at the current slow but steady recovery that started in the third quarter of 2009, interest rates will be identified as a key factor in economic growth over the past 39 months. At the January 2013 meeting of the Federal Open Market Committee (FOMC) of the Federal Reserve System, a short sentence was taken from the message of unchanged very low interest rates. The absent sentence had, in past FOMC press releases, given a date-specific time of 2015 for rates to remain at the very low levels that prevailed throughout 2012 and into 2013. That subtle change in the Federal Reserve’s message leaves the door open for interest rate increases that start earlier than 2015, and it is possible that rates could rise in the second half of 2014, if economic conditions warrant. In the meantime, the Federal Reserve will be doing more to stimulate growth after the damage from Hurricane Sandy slowed measured growth in the last quarter of 2012 and damaged the economy in the Northeast. Now is not too early to start devising a plan to deal with higher interest rates in your dealership, because rates are likely to increase for several years once they do start to move upward, whether that is in 2014 or 2015. In the meantime, very low interest rates will continue to help new car sales, as banks look to lend for cars and trucks because the repayment history of auto lending has been quite favorable during the last five years. By Paul Taylor, PH.D New Car and Truck Sales Will Increase by One Million in 2013 As Automotive Retailing Outperforms the Overall U.S. Economy