Low interest rates and extended payment terms lured consumers into auto dealerships in May. Shartia Brantley reports.
Pent-up demand drove consumers into auto dealerships in May. Auto sales were strong and on pace to having its best year in nearly a decade, fueled by demand for pickup trucks and sport utilities. Easier credit has played a role in boosting auto sales for a while, but extended loan payment terms have lessened the sting from higher priced vehicles, making financing more affordable. Edmunds.com's Jessica Caldwell: SOUNDBITE: JESSICA CALDWELL, DIRECTOR OF INDUSTRY ANALYSIS, EDMUNDS.COM, IN (ENGLISH) SAYING: "I think, when we look at what's going on in the market with longer loan terms, or people financing lower interest rates, that's helping people get into these cars and, as we all know, car prices are getting more expensive, over $30,000 now, and that's not a small sum of change." Caldwell says May sales were strong from the start of the month, and it does not appear the brakes will be applied in the near-term as the car buying season ramps up. Leases are spurring sales. SOUNDBITE: JESSICA CALDWELL, DIRECTOR OF INDUSTRY ANALYSIS, EDMUNDS.COM, IN (ENGLISH) SAYING: "The leasing cycle has shortened ownership times for a good majority of the market, so they are getting cars more often. So, I think that we're going to continue, especially through the summer, see strong sales. We have fourth of July weekend, which brings in a lot of people, and, also, at the end of the summer when you start to see the model year sale downs and Labor Day Weekend, that should bring in another bunch of consumers." But headwinds remain. The average price of a regular gallon of gas has risen 15 cents over the past month, and credit and leasing remain a risk. SOUNDBITE: JESSICA CALDWELL, DIRECTOR OF INDUSTRY ANALYSIS, EDMUNDS.COM, IN (ENGLISH) SAYING: "I think, when leasing cools down, I mean, we can't have, necessarily, these really great lease deals forever, because the used market will be flooded by these off lease vehicles. Therefore, some of the lease deals might not be as great." For now, companies like Ford are ramping up production to meet increased consumer demand.