The time it takes for consumers with new-car loans to reach a positive equity position on their vehicles has grown by 12 to 14 months over the past 15 years, but that's not necessarily a bad thing, says Steven Szakaly, chief economist for the National Automobile Dealers Association.
It now takes a consumer with a new-vehicle loan 36 to 38 months to reach positive equity. Back in 2000, it took around 22 months, he said.
What hasn't changed is that it still takes consumers about half their loan period to get into that positive equity position, Szakaly said. The time it takes to reach positive equity today just looks different because the lifetime of the car has changed, he said.
The average new-vehicle loan term was 67 months in the first quarter this year, according to Experian Automotive.
Szakaly said extended loan terms are not a major concern because the underlying fundamentals, such as what vehicles are used for and how long owners keep them, have changed.
"So the relative point where a person's in a positive equity position, given their ownership cycle, hasn't actually changed," he said during a quarterly briefing for journalists last month. "What's changed is how quickly they're coming into the store and how quickly they're looking at buying a new car."
The industry is expecting robust U.S. new light-vehicle sales in 2015 and 2016 -- Szakaly predicts 17.2 million this year and 17.6 million in 2016 -- but in the long term, sales will weaken, he said.
"There are a lot more used cars coming onto the market" and "interest rates are going up," he said.
Too, consumers' wages aren't rising in tandem with new-vehicle prices. The long-term outlook for the auto market is annual sales of under 17 million units. But for now, he said, "pent-up demand is clearly there."
Every forecaster's big question is: "When does pent-up demand run out?" Szakaly said. "Not this year, probably not next year, but I think it's going to be hard to keep it going beyond that."