Economy saved by Auto sales in 2012?

The Washington Post

6:08 a.m. CST, January 2, 2013

It’s not too much of an exaggeration to say the U.S. economy was powered by car sales in 2012. Auto companies are now expected to have sold 14.5 million new vehicles in 2012, according to Kelley Blue Book. That’s a 13 percent rise over last year and the highest number of sales since the financial crisis hit. 

If cars hadn’t been flying out of dealerships, the year would have looked considerably bleaker. Vehicle purchases by consumers alone accounted for roughly 30 percent of all economic growth in the first half of the year, according to Credit Suisse. 

 Another possibility is that consumers can’t really afford not to buy cars at this point. Back in January, the typical car on the road was a record 10.8 years old. Most people had put off replacing their vehicles during the downturn, and their cars and trucks were becoming ancient. Auto analysts referred to this as “pent-up demand,” and 2012 was the year the dam finally burst. Americans were bound to start buying cars en masse sooner or later, and a wave of recalls wasn’t going to stop them.

 If so, that’s relatively good news for 2013. Despite all the strong sales, the average age of cars on the road has now risen even higher, to just over 11 years old. That’s one reason why many analysts predict the auto industry will keep growing next year and keep bolstering the U.S. economy. And at this point, it seems like very little — not the “fiscal cliff,” not a spate of recalls — can slow things down.

 

Read More here: http://www.washingtonpost.com/blogs/wonkblog/wp/2012/12/31/auto-sales-saved-the-economy-in-2012/

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