New Car Sales Gaining on Used: Fed
Across the nation, March April and May were strong months for new vehicle sales with several regions reporting financing activity outpacing used car sales.
Increasingly strong new vehicle sales were reported by more than half the of the 12 Federal Reserve Districts with most regions seeing steady sales, according to the Fed’s June 4 Beige Book.
Demand was generally reported to be less robust for used vehicles than for new vehicles across the districts, the analysis showed.
The Fed’s districts include Atlanta, Boston, Chicago, Cleveland, Dallas, Kansas City, Minneapolis, New York, Philadelphia, Richmond, Va., San Francisco, and St. Louis.
In upstate New York, auto dealers reported new vehicle sales continued to be strong in April and early May, while used car sales have been mixed. Buffalo-area dealers reported more moderate gains of 5% from a year ago in new vehicle sales but also characterized them as strong. However, used vehicle sales were described as somewhat soft.
In the Cleveland district, the number of new vehicles sold in April rose sharply on a month-over-month basis, according to the Fed. Year-to-date sales were moderately higher compared to 2013 thanks to consumers shifting towards smaller, fuel-efficient cars and away from SUVs and crossover vehicles. Leasing was also a popular alternative, the district reported.
Still, year-to-date sales of used cars were stronger through April than for the same time period in 2013 for the Cleveland district.
In St. Louis, two-thirds of auto dealers contacted said compared with the same time last year, sales increased in April and early May. The district reported a mixed bag of activity with some contacts noting no change in the mix of used-car versus new-car sales, while others experienced more new car sales.
Auto sales grew at a slightly slower pace than in March but remained above year-ago levels in the Kansas City district. Sales were expected to improve in future months, and contacts said small, mid-sized family vehicles sold particularly well. Auto inventories rose but at a slower rate than earlier this year.
In Atlanta, the demand for auto loans has increased to the point that some bankers acknowledged they were getting more aggressive due to competition, according to the Feds’ Beige Book. However, they did note that they were not changing their loan structure or underwriting.
Dallas and San Francisco reported a rebound and solid demand for auto loans, respectively while the Chicago district noted a slight decrease in vehicle sales.