Car buyers driving up rate of consumer confidence

While the overall health of consumer spending remains somewhat suspect, there is no doubt the American love affair with cars is back in full bloom.

Reports for July show the pace of sales is the best in many years despite the millions of vehicle recalls in the past few months and other issues that would have discouraged consumers during the Great Recession.

“July’s performance is the clearest indication yet that retail buyers are driving market demand. Shoppers are looking past news of recalls and rising gas prices and they’re finding affordable interest rates and other incentives that make it easier to buy a new car,” said Jessica Caldwell, senior analyst at

Chrysler on Friday reported its best July since 2005 with sales of 167,667 vehicles, up 20 percent from the same month a year ago. The increase was led by a 41 percent jump in Jeep sales.

Ford reported retail sales last month were up 7 percent to 212,236 vehicles, the biggest July since 2006. And General Motors said it delivered 256,160 vehicles in July, an increase of 4 percent and the best month since 2007.

Not only are vehicle sales on the rise, so are prices.

“Overall, the industry continues to see average transaction prices rise at a solid pace. Truck and utility vehicles are the major drivers behind this strength, especially among domestic automakers. Increasing share of luxury vehicles also has played a role as sales in that segment have led the growth in the overall industry so far this year,” said Alec Gutierrez of Kelley Blue Book.

The industry has made an amazing recovery since 2009 when a total of just 10.4 million vehicles were sold. says July sales are anticipated to reach 1.46 million new cars and trucks, reaching an annualized rate of 16.8 million vehicles in 2014.

Some analysts would suggest the auto industry is only catching up for lost time. A study by HIS Automotive finds the combined average age of all light vehicles on the road in the U.S. reached 11.4 years at the end of 2013.

The number of vehicles in operation reached a record level of 252.7 million.

“This year, we’re seeing a somewhat of a plateau in the market, and expect it to remain over the next few years, without a major change in either direction. We attribute this to a number of factors, including the economy and the increasing quality of today’s automobiles,” Mark Seng of HIS said.

While rebounding sales are good for the economy and the car manufacturers -- the old line used to be, “As goes General Motors, so goes America” -- it also has a significant impact on local economies.

The New Car Dealers Association of San Diego County reported total sales of new and used vehicles in 2013 reached more than $9.4 billion, an increase of 8 percent over the previous year.

Combined, the dealerships employ more than 13,800 full and part-time workers with a payroll topping $687 million.

Bottom line, discretionary purchases such as cars are an excellent measure of how households feel about the overall economy and their personal finances.

“With consumer confidence on the rise in July, shoppers are clearly willing to spend a little extra on the vehicles they want,” said Kelley’s Gutierrez.

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