Top Auto Industry Headlines for 2012, and What to Expect in 2013


As we swiftly roll toward 2013, it's the perfect time stop and reflect on the year that was and forecast what we can expect in the year to come. Edmunds.com has identified the top five auto industry headlines from 2012, followed by five more headlines we can expect in 2013:

  1. Car Sales Offer Certainty in an Uncertain Economy
    The Dow had its ups and downs, housing had mixed results, and the U.S. government sparked near-economic chaos with the debt ceiling and fiscal cliff crises. But the one area that showed consistent year-over-year growth was the automotive market. Auto sales in 2012 will jump from 12.8 million new cars in 2011 to around 14.4-14.5 million new cars this year.
  2. Hurricane Sandy Victims Move to Replace Damaged Cars
    Hurricane Sandy caused widespread devastation in the Mid-Atlantic region, including damage to around 300,000 cars. The hurricane impacted a part of the country where 20 percent of the nation's new cars are sold. As a result, new car sales were sluggish in October, but the need to replace those damaged cars helped to provide a big boost to sales in November and keep the industry on the right track.
  3. Foreign Competition Rebounds
    When the earthquake and tsunami in Japan rattled the auto world in 2011, Edmunds.com said that U.S. automakers had a "once-in-a-generation" opportunity to reclaim market share from the Japanese. Well that opportunity came and went: Honda and Toyota's market shares each returned to pre-earthquake levels, while General Motors' market share hovered at or near all-time lows.
  4. The Return of Subprime
    When the U.S. economy fell into recession in 2008, banks took a hiatus on subprime lending. Everyone knew that subprime loans would eventually return, but no one knew exactly when. Our answer came in 2012: the average credit score for a new car loan finally returned to pre-recession levels by 3Q 2012, and subprime buyers now make up about a quarter of all financed new car transactions, a level that also hadn't been seen since before the recession.
  5. Small and Midsize Segments Dominate New Car Market
    Maybe it was the gas prices, which peaked at $3.94 in April. Or maybe it's because there are more quality offerings than ever before. In any case, small and midsize cars enjoyed the most year-over-year market share growth in 2012. The biggest losers? Large trucks and crossover SUVs.


So what can we expect in 2013? Here are Edmunds.com's five bold predictions:

  1. Lease Terminations Flood the Market
    Edmunds.com projects that there will be as many as 500,000 more car buyers coming off leases in 2013 than in 2012. That's 500,000 more potential new car customers to buttress the remaining pent-up demand.
  2. Used Car Prices Softening
    Those lease terminations should have at least some ripple effect on the auto industry — and especially used cars. Off-lease vehicles and more trade-ins will flood the used car market, and help to bring down prices. Edmunds.com expects the average used car price to fall $200-$300 per vehicle in 2013, which will continue the price drop we saw this year, after used car prices peaked in 2011.
  3. Housing Resurgence Creates 'Wealth Effect'
    Housing prices are starting rise, and should continue to rise in 2013. And while that's good news for the economy in general, it spells even more good news for the automotive market. Edmunds.com Chief Economist Dr. Lacey Plache puts it best: "Rising home prices make consumers feel wealthier, which translates into greater consumer confidence to make large purchases such as a new car."
  4. The Year of the Truck
    Somebody needs to build those houses, right? And when construction booms, so, too, does the market for pickup trucks, which are favored by builders and contractors. GM recently unveiled its upcoming line of 2014 Chevy and GMC pickups, which will only push the competitive juices of Ram and Ford F-150. So, while 2012 saw a renaissance in small and midsize cars, there's every indication that trucks will regain some its lost market share in 2013.
  5. Slower Rate of Growth
    Car sales grew about 13 percent in 2012. And while sales should continue to grow in 2013, it won't be at a double-digit pace. Edmunds.com expects 15 million car sales in 2013, or about four percent growth.


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