U.S. Dealership Sales On Record Pace In 2015
The average number of new vehicle sales per dealership in the U.S. is trending toward another record in 2015, according to a recent study by Urban Science. The study projects an average of 945 units sold per store based on an annualized U.S. sales rate of 17.1 million vehicles. At the end of 2014, the average number of new-vehicle sales per dealership was 921 units, and that was a nearly 50-unit increase from 2013.
August SAAR Tops 17.7 Million New Light Vehicles
According to Autodata, the August Seasonally Adjusted Annual Rate (SAAR) topped 17.8 million new vehicles, up from the July SAAR of 17.55 million new vehicles. The light-truck market share far out-paced that of cars (57.3% to 42.7%), which pushed vehicle transaction prices up nearly 3% compared to last year. The weakness in car sales has led to increased incentives, which have risen more than 3% so far this year.
Despite having one less selling day than August 2014, and losing Labor Day sales to September, Augusts’ sales were stronger than many analysts predicted. Total sales of 1.6 million vehicles were up half a percent from 2014, coming in at the highest sales pace since July 2005.
Light truck demand dominated the market in August, but U.S. shoppers once again demonstrated a preference for international nameplate models. Seven of the top ten selling vehicles in August were held by international automakers—one more than last month. Total automotive sales year-to-date are up 3.8% from 2014.
Auto Loan, Lease Balances Top $1 Trillion
According to the latest Equifax National Consumer Credit Trends Report, U.S. auto loan and lease balances have surpassed $1 TRILLION (with a “T”) for the first time ever. Total outstanding U.S. auto loans and leases topped $1 trillion earlier this summer, a year-over-year gain of more than 10%. The number of outstanding accounts also grew 8% from the same time a year ago to 73.7 million according to the Equifax report.
The report also indicates that subprime loans are on the rise, an indication that credit is remaining readily available for those looking to purchase a new car or truck. Subprime loans (those issued to consumers with credit scores below 620) rose 9.6% to 2.12 million. The rise in auto loans may also be a matter of necessity, since the average age of a car on the road is at a record-high of 11 and a half years.
Leases are also on the upswing, with finance companies outpacing banks, with portfolios more than seven times the size of bank lease portfolios, according to Equifax. Credit unions may also soon take a bigger piece of the financing pie. TransUnion recently reported that a survey of 90 credit union executives, found that nearly half ranked auto loans as their biggest growth opportunity.
Subprime Loans Driving Up Average APRs
An analysis compiled by Edmunds.com of used-vehicle financing activity during the second quarter at franchised dealerships turned up more evidence of record-setting growth. According to the site’s latest Used Vehicle Market Report, the average amount financed moved 3% higher year-over-year to $20,732.
Loan terms for used vehicles appear to be growing (the average reached 66.2 months in the second quarter) in tandem with higher average prices but, for the first time in nearly 10 years, average Annual Percentage Rates (APRs) are also increasing. According to Edmunds.com, the average APR right now is 7.7%.
The report states that nearly 60% of used buyers obtain an APR of 5% or lower; however, many buyers have APRs in excess of 10%.