The unemployment rate recently dipped in the latest Labor Department statistics and along with a slow housing recovery, both are indicating an improving economy. One sector, which appeared to be the weakest of them all, has turned a corner.
The automotive industry sold cars and light trucks at an annualized rate of 14.9 million, accounting for the best sales month since March 2008, according to Autodata.
“Autos are the bright, shining star in the economy,” said Mark Zandi, chief economist at Moody’s Analytics, to the Buffalo News. “It’s a key cog in the economic wheel. If we didn’t have the automotive recovery, the overall economic recovery would be much weaker.”
U.S. car sales are on pace to increase 10 percent for the third straight year and according to Diane Swonk, chief economist with Mesirow Financial in Chicago, it is only going to get better. Once the housing market gets going again and consumers are seeing positive equity on their homes, the car market will become even more vibrant. The annualized rate averaged 16.8 million vehicles in the United States from 2000 to 2007.
“The auto recovery is still not anywhere near what anyone would expect, given the number of new drivers and the level of pent-up demand,” Swonk told the Buffalo News. “But it’s a start, and not all sectors have that. There will be a big difference when people’s largest asset – their home – is moving up in value.”
Toyota saw the largest gains in September, accounting for a year-over-year increase of 42 percent, up from the 36 percent estimates by experts at Bloomberg, while both Chrysler and Honda beat out expectations for the month.
Bloomberg experts predicted the sales pace would come in at a 14.5 million pace.
Consumers are heading to auto loan companies to secure car financing, primarily due to pent up demand within the market, as well as improved consumer confidence and low-interest loans that are allowing potential car buyers to obtain funds for a car.
Cars nowadays are lasting beyond the 100,000 mile mark, due to improved efficiency and technology. The news serves as a good reminder to car owners to practice preventative maintenance, in order to improve the life of a vehicle. Car owner's can put off an expensive vehicle purchase by heading to a local car service center and having regular work done to their brakes and engine.