Car Sales Surge as Economy Improves

Apr 2, 2013 8:08am

Morning Business Memo…

Auto companies release their latest sales figures today and they’re expected to show new car and truck sales may have hit their highest level in almost six years, thanks to low interest rates and an improving economy. Analysts predict total sales of nearly 1.5 million cars and trucks, a number not seen since May 2007. That’s almost double the 855,000 vehicles sold in March 2009, the low point for sales during the economic recession, according to Ward’s AutoInfoBank. Sales are expected to be up 3 to 5 percent over last March. The average rate for a 60-month new-car loan has fallen to 4.12 percent from 4.52 percent at this time last year, according to Bankrate.com. Tax refunds may also be helping. The average federal tax refund this year is nearly $3,000, or enough to cover the down payment on a three-year lease of a new car. Full-size pickup truck sales are expected to rise nearly 15 percent in March, following big gains in February, Kelley Blue Book said. Construction companies are rapidly replacing their truck fleets as the economy improves and they win more business.

For nearly two decades, the Toyota Camry and the Honda Accord have ruled the mid-sized car market. They were neither stylish nor fast, but both the Accord and Camry had a stellar reputation for reliability. Now their dominance is starting to slip. Cars like the Hyundai Sonata, Ford Fusion, Nissan Altima and Kia Optima have cut into sales of the Camry and Accord by offering combinations of sleeker designs, luxury-car features and better gas mileage. The competition has shaken up the biggest segment of the U.S. auto market. Midsize cars accounted for almost 25 percent of the total industry in February, up from 22 percent at the end of 2007.

Looking for a tax refund? The IRS is still a little behind on processing returns compared to last year, because of late changes to the tax law by Congress. The IRS says it processed just over 77 million tax returns through March 22, compared with 82 million returns last year. The average refund is $2,827 this year, slightly lower than in 2012.

The US has gained 387,000 managers and lost almost 2 million clerical jobs since 2007, as new technologies replace office workers and plunge the American middle class deeper into crisis. New numbers from the Bureau of Labor Statistics reported by The Financial Times show rapid structural shifts — on top of high unemployment, that may increase income inequality. “The figures help explain why the US median household income has fallen 5.6 per cent since June 2009 to $51,404, even as the economy recovers,” reports the Financial Times. The top 10 percent of earners had the most earnings growth as the economy started growing after the recession.

Another rise for unemployment in the eurozone, the 17 nations that use the euro. The jobless rate hit 12 percent for the first time since the currency was launched in 1999. Eurostat, the EU’s statistics office, says today that the rate in February was unchanged. But January’s figure was revised up to 12 percent as 33,000 people in the eurozone joined the ranks of the unemployed. Spain and Greece continued to suffer from jobless rates above 26 percent.

Richard Davies Business Correspondent ABC News Radio abcnews.com Twitter: daviesabc

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