As 2016 is almost over, the U.S. auto market is on the verge of setting a new sales record, beating last year’s mark of 17.5 million new cars and trucks. Auto sales have been booming for several years, powered by a combination of cheap gas, easy credit, and pent-up demand. And with the unemployment rate now below 5%, there are plenty of Americans who now need a reliable, technologically up-to-date vehicle to get to and from work.
Although some analysts think the market has plateaued and that there’s no more growth to be had, the fundamentals point to continued strong sales before a downturn — a downturn that at worst would probably only knock at most a million off the current pace. That’s the good news. The bad news is that there’s a clear structural shift occurring when it comes to consumer demand. For decades,sales have been composed on a mix of vehicles, primarily passenger cars and pickup trucks. For a brief period after the Toyota Prius was introduced and gained popularity in the early 2000s, hybrids came into the picture. But the big shift arrived when the SUV appeared. Read more
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