An auto finance environment favorable to many U.S. consumers will continue to provide a tailwind for higher retail auto sales in 2014, a top Toyota executive said Tuesday.
That includes an increase in lease penetration and continuing easy credit for loans, Bob Carter, senior vice president of Automotive Operations for Toyota Motor Sales U.S.A. Inc., said during a speech Tuesday at the J.P. Morgan Auto Conference in New York.
Carter cited analysts forecasts for 2014 U.S. light-vehicle sales of 16 million to 16.5 million, up from 15.6 million in 2013. U.S. light-vehicle sales have advanced 5 percent this year through July.
“For instance, 400,000 more customers than last year are expected to come off leases from all brands,” Carter said. “And most will turn around and buy or lease a new vehicle.”
J.D. Power and Associates expects lease return volume of about 2.2 million cars and light trucks in 2014, up from about 1.7 million in 2013. Returning lease customers are more loyal on average to the same brand and to the same dealership than loan or cash customers.
Industry lease penetration reached a record 25.6 percent of all sales in the first quarter of 2014, up from 22.9 percent a year earlier, according to Experian Automotive.
The previous high was 24.2 percent, in the fourth quarter of 2013. Experian Automotive is expected to publish detailed results for the second quarter of 2014 this month.
“Another key factor is historically low auto loan rates,” Carter said. “Thirty years ago, we saw rates in the mid- to high teens, but they’ve steadily receded to the 3 to 4 percent rates we see today.”
Carter said rates could “tick up again,” but he said Toyota expects rates to stay relatively low and affordable.
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