Auto sales surged in 2014, as the nation’s improving labor market combined with rock-bottom interest rates and falling gasoline prices to propel the industry to its greatest success since the recession.
As car makers reported generally robust December sales, analysts predicted Monday that new car sales for 2014 would reach 16.5 million vehicles, up 6 percent from last year.
“2014 blew away anyone’s expectations with strong new-car sales, helped by solid new product, lowering gas prices, and an improving economy and consumer sentiment,” said Akshay Anand, an analyst for Kelley Blue Book.
The easing of credit, even for car buyers with checkered loan histories, has also helped fuel the industry. The strong performance was accompanied by continued increases in average transaction prices, allowing the auto makers to surpass predictions and continue an upward march that started after sales bottomed out in 2009.
The increase in auto sales has led to a growth in jobs in auto manufacturing in this country after the domestic industry's brush with death in 2009. Still, employment levels remain far below what they were even a decade ago. The Labor Department reported that 876,000 people worked in auto and auto-parts manufacturing in September, far below the 1.12 million employed in that sector in 2004.
With gasoline prices declining to their lowest levels in five years, sports utility vehicles, crossovers, high-performance models and luxury cars saw double-digit sales increases over the past year, driving profits for automakers. Meanwhile, sales of hybrids and full-size cars declined sharply over the past year.
Many analysts expect auto sales to continue their growth in 2015, although they believe the pace of improvement is likely to ebb over the coming year. “A slowly improving economy, with better employment and wages expected this year, will buoy 2015,” said Michelle Krebs, senior analyst for AutoTrader.com. “While new-car sales likely will rise again in 2015, it won’t be at the pace we’ve seen in recent years. Competition will intensify and automakers’ pledge to be disciplined in balancing supply and incentives with demand will be tested.”
The improvement in sales has been felt by almost every auto maker. General Motors, which was bedeviled by a huge and costly recall debacle connected to a deadly ignition switch defect in several older small cars, nonetheless reported that overall sales were up 5.3 percent last year.
“GM’s real success story comes from making these gains without excessive reliance on incentives or fleet sales,” said Karl Brauer, a senior analyst at Kelley Blue Book. “Consumers were a big part of GM’s growth in 2014, despite the recalls and negative headlines occupying much of the first half of the year.”
Chrysler, now part of Fiat Chrysler Automobiles, reported its best sales year since 2006, with more than 2 million vehicles sold. Honda sold a record 1,373,029 new vehicles in 2014, up 1 percent from 2013. Nissan, meanwhile said sales were up more than 11 percent in 2014 and Toyota sales rose 6.2 percent.
Volkswagen sales were down 10 percent in 2014, and Ford sales declined by .5 percent between 2013 and 2014.
BMW on Monday regained its spot as the top-selling luxury brand in the United States, ending the one-year reign of German rival Mercedes. BMW sold 339,738 vehicles in the U.S. market last year, a 9.8 percent jump from 2013.