How many of your neighbors are suddenly driving new cars?
Auto sales are rebounding as cautious Americans who held onto their cars through the economic downturn are now trading up to newer vehicles. Sales of new cars rose 17% in August, reaching an annualized rate of 16.09 million — not a record, but the fastest pace since December 2007.
AutoNation (AN), the dealership chain with the largest revenue, reported Thursday its new car sales soared a whopping 32% in August. Its sales of luxury-premium category vehicles swelled 37%.
Auto
dealerships of all stripes have upshifted financially as more consumers
commit to buying new cars and a rising number of willing lenders are
helping them do so.
The 10 auto dealership chains tracked in IBD's Retail-Wholesale-Automobile industry group have all seen sales and earnings tick higher in recent quarters. Most have also set new stock highs over the last month.
Analysts expect the financial gains to continue in coming years as the industry puts more distance between itself and the beating it took during the recession of 2008 and 2009.
"There are a number of things pushing growth in the industry right now — pent-up demand from buyers, better access to financing, an onslaught of new products and technologies," said Larry Dixon, senior automotive analyst at the National Automobile Dealers Association (NADA). "The whole industry has benefited."
In terms of stock price, collectively, the auto dealers' industry group is up 34% since the beginning of the year. It ranked No. 29 on Friday among IBD's 197 industries. In addition to AutoNation, CarMax (KMX), Penske Automotive Group (PAG) and Group 1 Automotive (GPI) are the group's largest players.
Aging Cars, Access To Credit
Before the industry's August sales report, most industry researchers forecast that sales of new vehicles will reach about 15.5 million units this year, up from 14.4 million in 2012. Even the most optimistic upwardly revisions are still well below the peak of 16.6 million units sold a decade ago. The trough occurred in 2009, when only 10.4 million vehicles were sold.
One of the key drivers of the recent growth is the nation's aging fleet of cars. The average age of cars on the road is about 11.5 years, according to industry estimates. That's well above the average of nine years established a few years ago.
"Consumers held on to their vehicles during the recession longer than would have otherwise, and now many of them are ready to get back into the market," Dixon said.
Auto sales are rebounding as cautious Americans who held onto their cars through the economic downturn are now trading up to newer vehicles. Sales of new cars rose 17% in August, reaching an annualized rate of 16.09 million — not a record, but the fastest pace since December 2007.
AutoNation (AN), the dealership chain with the largest revenue, reported Thursday its new car sales soared a whopping 32% in August. Its sales of luxury-premium category vehicles swelled 37%.
Ryan
Kolb, general manager of Hines Park Lincoln, stands in the showroom in
Plymouth, Mich. Auto sales soared in August, with luxury vehicles
and... View Enlarged Image
The 10 auto dealership chains tracked in IBD's Retail-Wholesale-Automobile industry group have all seen sales and earnings tick higher in recent quarters. Most have also set new stock highs over the last month.
Analysts expect the financial gains to continue in coming years as the industry puts more distance between itself and the beating it took during the recession of 2008 and 2009.
"There are a number of things pushing growth in the industry right now — pent-up demand from buyers, better access to financing, an onslaught of new products and technologies," said Larry Dixon, senior automotive analyst at the National Automobile Dealers Association (NADA). "The whole industry has benefited."
In terms of stock price, collectively, the auto dealers' industry group is up 34% since the beginning of the year. It ranked No. 29 on Friday among IBD's 197 industries. In addition to AutoNation, CarMax (KMX), Penske Automotive Group (PAG) and Group 1 Automotive (GPI) are the group's largest players.
Aging Cars, Access To Credit
Before the industry's August sales report, most industry researchers forecast that sales of new vehicles will reach about 15.5 million units this year, up from 14.4 million in 2012. Even the most optimistic upwardly revisions are still well below the peak of 16.6 million units sold a decade ago. The trough occurred in 2009, when only 10.4 million vehicles were sold.
One of the key drivers of the recent growth is the nation's aging fleet of cars. The average age of cars on the road is about 11.5 years, according to industry estimates. That's well above the average of nine years established a few years ago.
"Consumers held on to their vehicles during the recession longer than would have otherwise, and now many of them are ready to get back into the market," Dixon said.