US auto sales stay strong in September

Associated Press Modified: October 2, 2012 at 5:01 pm •  Published: October 2, 2012
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DETROIT (AP) — Americans found plenty of reasons to buy new cars in September, making auto sales a bright spot in the economy for yet another month.

Total U.S. sales rose 13 percent from a year earlier to nearly 1.2 million. Analysts think sales could hit 14.3 million this year, up from 12.8 million last year.

Low interest rates, aging vehicles that need replacement and appealing new models are fueling this year's consistently strong sales, says Jessica Caldwell, an analyst for the Edmunds.com automotive website.

"That's a good combination to get people shopping again," Caldwell says. "That's really what sells cars."

Here's why auto sales were strong in September:

— FINANCING. Low-interest loans are easy to get again, now that banks have loosened lending. New car loans carried an average interest rate of 4.05 percent in September, the second-lowest rate after December 2011, according to Edmunds.com, which started collecting data in 2002. People with good credit can get a 2-percent rate from a bank or credit union.

The cost of some models could fall further if automakers try to undercut each other in the small and midsize car markets, says Tom Libby, lead North American forecasting analyst for the Polk research firm.

"You have these couple of segments where there's brutal competition," Libby says.

— NEW MODELS. New vehicles always pique buyers' interest, and there are a lot of them hitting the market now, including redesigned versions of big sellers like the Honda Accord, Nissan Altima and Ford Escape. Sales this year have also gotten a boost as Toyota and Honda reentered the market after the Japanese earthquake in March 2011.

Michael Silver, 67, was driving by a Mercedes-Benz dealership in Delray Beach, Fla., last month when he saw the newly redesigned 2013 E350. The retired principal fell in love with the styling and bought one on the spot after getting a good trade-in price for his Lexus.

"September is usually the worst time to buy a car, because the new models are out and the deals aren't good," Silver says. "But I just fell in love with it."

— CONSUMER CONFIDENCE. Consumer confidence, one of the biggest factors influencing car-buying, jumped in September to the highest level since February. It was bolstered by a brighter outlook for overall business conditions and hiring.

When people are more confident about the economy, they're usually more willing to buy big-ticket items like cars.

—AGING VEHICLES. Many Americans have to buy a new car because their old one is on its last legs. The average age of a car or truck on U.S. roads is approaching a record 11 years. Even people who buy new cars are keeping them for almost six years before getting rid of them, the longest time ever, Polk says.

"They're sick of looking at them," says Jack Nerad, editorial director of Kelley Blue Book. "A lot of them just become undriveable."

Uncertainty about the economy is keeping sales from rising even faster. Some Americans are holding back on major purchases until they see how the budget battle shakes out in Washington, whether Europe can fix its economy and who wins the U.S. presidential election, says Jeff Schuster, senior vice president of forecasting for LMC Automotive, an industry consulting firm.

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