Automobile and light truck sales are leading the way to an American economic recovery, and Colorado’s vehicle sales growth picture is even better.
Automobile manufacturers started 2012 predicting good growth. They now are boosting their predictions to “excellent” if current trends continue, expecting to exceed 14 million vehicles sold in 2012. That’s the best it’s been in four years. According to government figures, motor vehicle output was the main driver of half of the first quarter’s 2.2 percent economic growth. Making it even better news, the auto industry’s good health is having a huge multiplier effect, influencing supply and parts manufacturers, employment, consumer lending and a lot more.
The State of Colorado’s economic forecasters are pretty optimistic about the state’s forward direction. They say it’s “…likely due to the state’s favorable business climate, innovative workforce, and a diverse set of industries.” Their optimism is reflected in the last few months of vehicle sales data and the momentum is accelerating. New car and light truck registrations this March were up 26 percent over March 2011. The April figures were even better: up 29 percent compared to April 2011. According to Auto Outlook, the year-to-date data, January through April, Colorado new vehicle registrations were up 21.2 percent, compared to 6.4 percent nationally.
Investment in American auto manufacturers has paid off in better quality, more desirable vehicles and higher sales. In Colorado, through April of 2012, 17,745 Detroit-made cars and light trucks (including SUVs) were sold, about 4,000 more than the same period last year. European models soared even higher by percentage: 34.9 percent more so far this year, or 5,056 vehicles. Korean brands grew by 20.1 percent and Japanese brands by 13.1 percent.
Vehicle classes experiencing an increase in market share this year include mid-size SUVs, full-size pickups, compact pickups, mid-size passenger cars, entry-level cars, compact luxury SUVs, full-size luxury SUVs and large mid-size passenger cars.
Individual brands show remarkable growth. For example, the tiny smart city car, which drew a huge, curious crowd at the Denver Auto Show in March, experienced 266.7 percent growth in April 2012 v April 2011. Luxury manufacturer Jaguar notched 200 percent growth in Colorado from April to April. Other big winners include Chrysler, +107.4%; Jeep, +106.3%; Land Rover, +100%; Audi, +68.6%, BMW, +63.6%; Volkswagen, +58.8%; Mercedes, +42.3%; and Kia, +40.1%.
Many factors are driving the boom. Foremost is that consumers are becoming more comfortable about the economy. As noted earlier, the state’s economic forecast is – as they say – guardedly optimistic. Colorado’s employment picture is improving and is projected to be between a half and one percent better than the national average.
There’s substantial pent-up demand for new vehicles. The average age of vehicles on the road exceeds 10 years – an all-time high. With the economy improving, drivers are ready to trade in their aging vehicles. Gasoline prices also figure into consumers’ calculations. Gas prices recently have been the highest in a year, even though Colorado’s are lower than most other parts of the country. Consequently, many drivers are looking for more fuel-efficient vehicles; trying to hit the “sweet spot” between having enough room to carry both the passengers and stuff they want while getting the fuel efficiency they need. Not surprisingly, hybrid manufacturers are seeing good growth. For example, Toyota reports that Prius sales are outpacing supplies.
Finally, new car and truck dealers still are offering attractive sale and lease deals. With the Federal Reserve continuing to hold down interest rates and credit easing, it’s a great time to go shopping for a new car or light truck!