Stable Gas Prices, Younger Buyers, Expected To Push Car Sales Higher

TRAVERSE CITY, MI -- (WWJ) Industry experts see stronger car and truck sales continue for a while, with a few possible reasons for concern.

The year got off to a tough start, mostly because of rough weather. A warmer spring brought buyers back into showrooms, and they've pushed the annual rate over sixteen million ever since.

"We're expecting that sales will be about 16.3 million when all is said and done<" says AutoTrader.com senior analyst Michelle Krebs. "So, a good year."

The second half of the year, says Krebs, is generally a good time for pickups. It could be pushed on even more this year, as Ford brings a new F-150 to market.

Ford's Chief Economist Emily Kolinski-Morris expects an improving housing market to help pickup sales. But that follows a period of time when truck sales were strong, even with a weak housing industry.

"We have seen, fortunately, the activity in the mining and energy sectors picking up a great deal of that slack," she said. "So, the full size pickup segment has actually performed relatively well, even in the absence of a strong housing recovery."

Trucks and SUV's--particularly smaller crossovers--have been a big part of the market this year. That's expected to continue.

Steven Szakaly, Chief Economist for the National Automobile Dealers Association, sees gasoline prices remaining stable for several years.

"We have significant tight oil, shale oil," he said. "These developments are very positive in the long term."

Not so positive, says Szakaly, is an unemployment rate that's fallen slower than economists would like. Some who are older, or have been out of work a long time, may see their lives changed permanently.

"Many of people who were in the labor force, are not likely to come back."

That, Szakaly says, could put a chill on car sales.

"As labor force declines, commuting will decline, and clearly people will not be buying as many new cars or used cars as before."

Other unknowns include the impact of car sharing, and telecommuting.   Both could mean consumers need fewer new cars.

Experts speaking at the conference, however, to believe that young people remain interested in purchasing new cars and trucks.   It's a matter of lower paying jobs, and higher student loans.

But, we've seen sales among the "Millenials" rise so far this year.  That fits in with a drop in unemployment among the young, and a rise in their standard of living.

"You get a job, pay your student loans off," said analyst Jeff Schuster of LMC Automotive. "You start to have families. You start to have to run around with the kids. I think that all equates to a positive environment for the auto industry."

The auto industry remains a cyclical business.  Often downward cycles are triggered by outside events.

So far, those events haven't had much of an impact, says Ford's Emily Kolinski-Morris, but history has shown that can change quickly.

"Of course, we can't understate that at the moment, with the situation in the Middle East, the situation going on with Russia and Europe. All of those have the potential to create some unforeseen consequences."