Low Gas Prices Help Auto Sales Heat Up 2014

Gasoline prices are incredibly low. I was upstate last week and had to do a double take: It was close to $2 a gallon. December's strong sales numbers certainly reflect that fact, as the month was driven by an appetite for crossovers, SUVs and pickups. Gasoline prices won't stay low for long, and most consumers understand the inherent volatility at the pump. So the influence of dollar-per-gallon on auto sales might have as much to do with the fuel-efficiency technology SUVs/crossovers and cars have now. It might just make it easier for a skittish consumer to consider an SUV, even if they have one eye watching the gas station signs like a hawk. 

Oh, and lower gasoline prices mean a little more cash in hand. Enough to influence auto-shopping choices such as whether to buy a new car or a "pre-owned" one? For the optimists, absolutely. GM and Chrysler are both probably very optimistic right now. General Motors' economists said 2014 would end up being a 16.6-million unit year, capping a five-year climb-out from the recession, where sales were a notch above 10 million in 2009. 

FCA U.S. (formerly Chrysler Group), and GM had 20% and 19% December increases, respectively. For the full year, GM is up 5% and FCA 16% in the United States. The truck boom helped FCA, with its Jeep division getting a record year, with a 41% increase in volume, and Ram was up nearly 25% for the year. GMC, GM's truck division, increased 23%.

Honda set a light-truck sales record for December and the whole year, with 67,479 units, a 6.2% increase for December, and total 2014 sales of 702,351 vehicles, up 1.5%. The Honda CR-V saw a 12.6% increase in sales for December and 10.2% for the year. 

Michelle Krebs, senior analyst for opined that Honda's flat sales was about peoples' preference for SUVs. "Accord and Civic, the backbone of Honda sales, struggled throughout the year, but CR-V sales soared. Similarly, at Honda’s Acura division, the MDX utility carried the load.”

Nissan set an all-time full-year sales record in 2014, mostly from cars like the new Altima, but the truck side, which is essentially without a full-size truck since the company is about to unveil the new Titan in Detroit, also drove volume. The company, including the Infiniti luxury division, was up 7% for the month and 11% for the year. 

Ford, meanwhile has had a flat year, up only 1% in December. But there's a big caveat with that, as the new F-150 is about to go on sale and most buyers are hanging fire. Said Karl Brauer, senior analyst at KBB, “[Ford] is well positioned for 2015, with the aluminum F-150 hitting full production in the coming months, growing interest in its recently-introduced Transit van and an all-new Explorer set to be released. Lincoln also is showing signs of life, with the all-new MKC and updated Navigator perfectly positioned to benefit from continued demand in SUVs.”

Krebs is bullish on 2015, saying “A slowly improving economy, with better employment and wages expected this year, will buoy 2015." But while she sees positive sales this year, competition and a surge of used car/certified pre-owned car supply could press the issue since they could lower trade-in value and even compete with new cars. "The possibility of higher interest rates could be a concern, and we have to wonder if the stock market can continue at peak levels causing consumers to enjoy a feeling of wealth.”

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