Auto sales kick in to a higher gear

Pent-up demand for new cars, better financing options for buyers, better fuel efficiency, and a rising price of used cars continue to boost car sales.

Ford just announced its sales were up 12.6 percent last month compared with a year ago. Chrysler says its sales were up 14 percent -- that is the 29th consecutive month of sales growth for Chrysler, and the company's best performance in five years. And more carmakers are expected to release good economic news later today.

We spoke with analyst Juli Niemann of Smith Moore and Company in St. Louis about to find out why the auto sector is bouncing back during a time when most retailers in this country are not growing.

"There's huge pent up demand here in the United States for automobiles," Niemann said. "Secondly, you've got a lot of really good financing incentives."

Finally, the prices for used car are rising, she said. "We're looking at a period here of really good demand."

What about gas prices; How are the affecting sales? "Fuel efficiency is very important. Four dollars a gallon always focuses the drivers' attention," Niemann said, noting that fuel-efficient models are helping to boost sales. "The consumer wants good fuel efficiency plus something new and spiffy looking. They're getting it in the new models coming out now."

About the author

Juli Niemann is executive vice-president for research and portfolio management with Smith, Moore and Company.

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