Autos

Shelly Banjo is a Bloomberg Gadfly columnist covering retail and consumer goods. She previously was a reporter at Quartz and the Wall Street Journal.

Truckin' Along
U.S. vehicle segment mix
Source: Bloomberg, Ward's Automotive

It was a jolly Christmas for U.S. car sales, capping off what's shaping up to be the longest stretch of rising sales since World War II.

Ford, Toyota, Fiat, and Nissan were among the automakers reporting record-breaking numbers on Tuesday. Don't expect the streak to end in 2016.

Economic trends are in automakers' favor: U.S. unemployment is at record lows, household net worth is rising, and home prices are nearing pre-crisis levels as a new generation of 20- and 30-somethings finally move out of Mom and Dad's house. As they move out, those millennials are buying cars, too

The Federal Reserve closed out 2015 by raising interest rates for the first time in a decade. That could make borrowing for car loans more expensive in the future, but rates won't move up quickly enough to dent sales this year. Access to auto loans remains abundant, while favorable dealer incentives and leasing opportunities make costlier cars seem more affordable to buyers.

So consumers feel good. And with the average age of U.S. cars and trucks hovering at 11.5 years, many shoppers are anxious to replace those old vehicles with newer, more tech-savvy models. 

Ageing Fleet
Average age of U.S. cars and trucks
Source: Bloomberg Intelligence, R.L. Polk & Co.
 

Plus, gas prices -- which have plummeted to levels not seen since 2008 -- are expected to stay low throughout 2016, stoking America's renewed love affair with higher-priced trucks and SUV's

How Low Will It Go?
U.S. retail gas prices forecast to average $2.36/gallon in 2016
Source: U.S. Energy Information Administration's Short-Term Energy Outlook

That's good news for car manufacturers, helping giants such as Toyota, General Motors, and Ford move past headline-grabbing recalls and supply issues. And they're gaining cred with millennials by partnering with tech companies such as Google and Lyft to create fleets of driverless cars.  

Automakers still have near-term challenges outside of the U.S., especially in once-hot growth markets such as Asia and Latin America, which have cooled lately. Car sales in the U.S. will eventually plateau as credit tightens and easy money becomes scarcer.  But for 2016, car makers remain in high gear. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Shelly Banjo in New York at sbanjo@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net