SANTA MONICA, Calif., Dec. 18, 2014 /PRNewswire/ — TrueCar, Inc., the negotiation-free car buying and selling platform, estimates total revenue from consumer purchases of new and used cars and trucks will surpass $1.1 trillion this year aided by higher transaction prices across the board.
Consistent strong demand for vehicles should lift total vehicle revenue 8.3 percent this year over about $1 trillion in 2013. The increase comes amid sustained economic expansion, an improving job market, falling gasoline prices and a consumer shift to higher revenue segments, including pickup trucks and luxury vehicles. Total market sales this year should reach 54 million units, an increase of 8 percent, including 16.5 million new and 37 million used automobiles.
“The overall buying power in the auto market sometimes isn’t fully appreciated: $1.1 trillion is an extraordinary number,” said John Krafcik, president of TrueCar. “To put this in perspective, new vehicle revenue alone will surpass the value of new single family home sales in the U.S. nearly three times. It’s a remarkable year for the industry as both sides of the market are seeing notable growth and commanding strong pricing power.”
With unemployment at the lowest level since 2008 and used vehicle inventory levels starting to rebuild to normal levels, both new and used vehicle buyers have found opportunities to buy. The average new vehicle sells for $31,831 this year, up 1.9 percent over 2013, while used vehicle transaction prices have risen 5.1 percent to an average of $16,335, based on TrueCar data.
Used vehicle sales are poised for a strong finish in 2014 with a 3.3 percent increase. The TrueCar new to used vehicle ratio (for every new vehicle sold, x amount of used vehicles are sold) for 2014 should be 1:2.2. This is down 2.5 percent from last year’s 1:2.3. The decline is due to the steeper increase in new vehicle sales volume, up 5.9 percent this year, versus used vehicle sales, which are up 3.3 percent. During the recession, the ratio widened to as much as 1:4.0 when new vehicle purchases plummeted, which also curbed future used vehicle inventory levels.
TrueCar predicts the U.S. supply of used vehicles in 2015 will return to a more normal level after a period of unusually tight inventory. Next year’s supply of used vehicles that are five years old or younger should increase by 10 percent.
“This is the last year we expect used supply to be impacted by the recession’s pullback in new vehicle buying,” said Larry Dominique, TrueCar’s executive vice president and president of ALG, TrueCar’s residual value data unit. “An increase of supply would benefit consumers shopping for used vehicles next year in terms of selection and potentially lower transaction prices.”
TrueCar, Inc. (NASDAQ: TRUE) is the negotiation-free car buying and selling platform. TrueCar enables a negotiation-free car buying experience by giving buyers transparent insight into what others actually paid (price confidence), upfront pricing information (price discovery), and access to a network of trusted TrueCar Certified Dealers who provide guaranteed savings certificates and seamlessly complete the car purchase. The reality is that buying a car is painful and buyers fear they are going to overpay or be surprised with hidden fees. TrueCar’s transparent upfront pricing information makes the car buying process simple so there are no surprises and buyers never overpay. TrueCar’s mission is to make car buying simple, fair and fun. Its national network of more than 9,000 TrueCar Certified Dealers, including both new car franchise dealers and non-franchise dealers, is committed to providing negotiation-free savings off MSRP and upfront pricing information for all car-buyers, including members of some of the country’s largest membership and service organizations such as AARP, American Express, AAA, and USAA. Note: Not all program features are available in all states. Go to www.truecar.com for program details. TrueCar is headquartered in Santa Monica, Calif., with offices in Santa Barbara, Calif., San Francisco, Calif., and Austin, Texas.
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