Auto Sales Could Drive Over a Cliff

For 2014, US auto sales are projected to hit roughly 17 million units. Car sales have been below that level since 2008. While the projection is good news for mass retailers and the American economy, one research firm does not expect the good times to roll. Many trends appear to indicate that US auto sales will drop below the 16 million mark, including:

  • End of cheap credit;
  • Increase use of car sharing services;
  • Millinials' indifference toward car ownership;
  • Longer period of ownership.

Beyond 2015, forecast diverge. Some forecast show a small (less than 500,000 units) increase for the next five years while other forecast show a small but steadily decrease to 15.5 million units.

The longer ownership could prove more worrisome as the average length of auto ownership recently crossed the seven-year mark while the average of an auto is nearly 12 years.

The limitations cause at least one analyst to question Warren Buffet's recent decision to purchase the Van Tuyl dealership group. While the purchase would not generate a positive ROI, one reporter noted it gives Buffet a "planes (NetJets), trains (BNSF railroad) and automobiles (Van Tuyl, BYD)" portfolio.