When the U.S. economy saw large declines in housing prices and a large increase in unemployment rates and gas prices, unsurprisingly the number of cars sales took a drastic hit, as well. The downturn was the worst seen in the auto industry since the times of the Great Depression
. Car sales didn't recover for over six years. Not a single month during that time rose above the amount sold in December 2007. As of March of this year, however, that streak has finally been broken
. March saw sales that annualized to 15.6 million, well above the predictions for the year. So, what drove the increase in sales? Experts believe that several factors, simultaneously contributing, have managed this long awaited feat. One factor may be the availability of new and well-reviewed products. Another is the pent-up demand that has come about as a result of the financial strain of the last few years. The tough economy has forced many lenders to lower interest rates in order to entice consumers to borrow, offering further incentive to purchase. And finally, tax season results in many people receiving a refund that could be used as a down payment for a new car. While not all key manufacturers have released their March numbers, assumptions have been made that many planners may need to boost their forecasts for the year. General Motors claims to have some of the largest gains of those who have reported, boasting a sales surge of six percent. Ford had some struggles with its Lincoln division, but still managed to match General Motors' six percent, overall. Chrysler, the nation's smallest domestic producer, managed a five percent gain, its 36th consecutive month of posting an increase. Volkswagen achieved a 3.1 percent increase in March, and Nissan and Toyota both increased by one percent. Ironically, the highest number of sales achieved in six years did not translate to the price of new cars hitting a record low during that same time period. Many available models are steadily increasing in price, and many dealerships are offering fewer bonuses and perks than ever. In March 2013, the Average Transaction Price - what a consumer spends after accounting for options and incentives – reached $31,087, a near record in the auto industry. This is up 1.1 percent from March of last year. Is this an indication of what the future will hold?
Most experts agree that auto sales will continue to steadily increase throughout the year, although perhaps not reaching the same levels as seen in March. As for the price of the cars, increases will most likely persist, depending on various factors. Economists are particularly encouraged by this increase because auto sales are usually highly indicative of the health of the economy. Largely because of the increase in auto sales, the Dow Jones industrial average hit another record high April 2, 2013. Whatever the reason behind the increase in sales, manufacturers and economists alike are happy it's happening and are encouraged by what it means for the future.