American consumers are on pace to spend more than $400 billion buying new vehicles this year for the first time ever.
That’s nearly 80 percent more than just five years ago, during the recession, according to J.D. Power and Associates, which does not adjust the numbers for inflation. It’s also more than a decade ago, even though sales volumes are still lower now. Higher transaction prices have more than made up for the shortfall in volume.
The rise in revenue is comfortably outpacing the overall gain in volume as consumers shift toward larger, pricier SUVs and crossovers and away from less-expensive sedans. And the added revenue is lubricating the industry like never before.
At 2004 transaction prices, which were about $4,500 per vehicle less than today, the industry would have needed to sell about 19 million vehicles to achieve the current level of consumer spending.
“The industry is performing at a very, very high level,” said Thomas King, a J.D. Power vice president. “There’s good news on volume, exceptionally good news on transaction prices and therefore record-breaking spending. We broke the record in ’13 and we’re going to break that record again in ’14.”
Atrocious news for the planet and its dominant species, of course…
But what’s that, compared to even more money for the 1%?