TrueCar Inc., a car buying and selling program, estimates total revenue from consumer purchases of new and used cars and trucks for 2014 will surpass $1.1 trillion, aided in part by higher transaction prices across the board.
“The overall buying power in the auto market sometimes isn’t fully appreciated: $1.1 trillion is an extraordinary number,” says John Krafcik, president of TrueCar. “To put this in perspective, new vehicle revenue alone will surpass the value of new single family home sales in the U.S. nearly three times. It’s a remarkable year for the industry as both sides of the market are seeing notable growth and commanding strong pricing power.”
Krafcik says consistent strong demand for vehicles should lift total vehicle revenue 8.3 percent this year over the nearly $1 trillion in 2013. He says the increase comes amid sustained economic expansion, an improving job market, falling gasoline prices, and a consumer shift to higher revenue segments, including pickup trucks and luxury vehicles. Total market sales this year should reach 54 million units, an increase of 8 percent, including 16.5 million new and 37 million used automobiles.
Additionally, Krafcik says with unemployment at the lowest level since 2008 and used vehicle inventory levels starting to rebuild to normal levels, both new and used vehicle buyers have found opportunities to buy. The average new vehicle sells for $31,831 this year, up 1.9 percent over 2013, while used vehicle transaction prices have risen 5.1 percent to an average of $16,335, based on TrueCar data.
TrueCar predicts the U.S. supply of used vehicles in 2015 will return to a more normal level after a period of unusually tight inventory. Next year’s supply of used vehicles that are 5 years old or younger should increase by 10 percent.
“This is the last year we expect used supply to be impacted by the recession’s pullback in new vehicle buying,” says Larry Dominique, TrueCar’s executive vice president and president of ALG, TrueCar’s residual value data unit. “An increase of supply would benefit consumers shopping for used vehicles next year in terms of selection and potentially lower transaction prices.”
