US autos Jan13.pngDecember saw continued strong volume in US auto markets, with sales (red line) at pre-Crisis levels for the month. The key driver is the need to replace ageing vehicles, but manufacturers were also generous with rebates and credit offers to help clear inventory:

• Overall, 2012 sales were up 13% versus 2011 at 14.5m
• At the same time, the average age of the US fleet hit a new record 11.1 years
• GM offered $9k rebates on some models to cut pick-up supply by 20k

This is therefore quite a different market from the 1995-2007 supercycle, when sales averaged 16m/year, and hit 17.3m at their 2000 peak.

Today, manufacturers are benefiting from the low sales seen between 2009-11, as this means the used vehicle market is much smaller than normal. Only 10.4m autos were sold in 2009, for example, so there are relatively few vehicles now available to used-car buyers. In turn, this means prices are relatively strong.

So for an average American, the attraction of a new car is much higher than normal. Manufacturers have also spotted this trend, and eased their credit conditions to ensure buyers can borrow the money required. Buyers thus effectively have a choice between a relatively high-priced used car, or an attractively priced and financed new car.

How long this trend will last is a critical question, of course. The blog will analyse this in more detail, as soon as the relevant data becomes available.