How Long Does the Car Market Sustain the U.S. Economy?


The U.S. love affair with the car shows little sign of deterioration, but the consumer generally has started to show some signs of buyer fatigue. There is now a battle of sorts between the motivations that lead to more car purchases and those that would signal a slowdown. The average age of a car now exceeds 11 years, which would have meant massive replacement only a few years ago. Today, the older car is perfectly serviceable, and people are far less likely to be forced to buy a new one.

The latest statistics indicate a 3.7% increase in the last month -- that would suggest that there will be around 15 million cars sold this year. While not awful, it remains far of the pace of heady recent years. The big question is whether that pace will be sustained with all the seeming consumer uncertainty evident these days.

Another pressing question revolves around what the banks will do. Up to the present, banks have been unusually active in terms of car loans because these have been about the only reliable place for them to expand. However, car loans have been packaged in the same way as that of mortgages last decade. As such, concern is rising that banks have been getting into risky territory with such lending, leading experts to ponder when said willingness to lend will come to a crashing halt. That would have an impact on more than just those seeking to purchase cars.

-Armada Corporate Intelligence
 

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