Mar 11, 2011
Analysts are predicting that gasoline prices will exceed an average of $3.50 per gallon in the U.S. this year – mirroring the all-time high achieved in the summer of 2008, when gasoline prices rose above $4 a gallon in some places.
Paul Taylor, NADA chief economist, pointed out that higher gasoline prices would also increase demand for the more expensive hybrids that typically languish on dealer lots when gasoline prices are lower, with sales of diesel cars and trucks expected to rise as well.
The shortage in used vehicles is working in some consumers' favor, too, he added, because it has improved trade-in equity on their one- to five-year-old vehicles. That trend is paying dividends for dealers, too, because used-vehicle inventories are now more valuable.
“The shortage of used cars is one more pillar of strength for the new-car market,” Taylor explained.
Credit availability also remains a positive, with very low interest rates helping drive new-vehicle sales this year, he noted. The Federal Reserve Board at its last meeting indicated that the performance of the economy is likely to warrant exceptionally low levels for the federal funds rate for an extended period, putting automaker finance companies and other lenders in a position to offer very attractive financing rates on new-car loans, according to Taylor.
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