By on December 5, 2011

The long-awaited pent-up demand is finally here, and it’s here to last – at least into the first quarter of 2012, says Edmunds.com. A “mini-bubble” of new car sales has been identified, and it could make for a good start of 2012 say the car-counters of Edmunds.

Edmunds.com estimates that consumers deferred 300,000 potential new car purchases over the summer. An estimated one-third – or 100,000 – of those deferred buyers have already returned to the market. Another 100,000 purchases should return to the market by March 2012. The fate of the remaining 100,000 deferred purchases, though, is a little more unclear.

“The exact number of remaining sales that will return – and their exact pace –  depends on economic conditions, since some portion of buyers likely have been deterred by current economic uncertainty,” says Edmunds.com Chief Economist Lacey Plache.

 

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20 Comments on “All Hail The Pent-Up Demand...”


  • avatar
    Volt 230

    Don’t buy it for a second! it goes against every economic news you read from just about every corner of the world.

  • avatar
    mike978

    I read about this on Edmunds. They seem pretty good at estimating monthly sales (see grade the analysts) and wasn`t November the highest SAR for the year? But then 300,000 units isn`t that many to pick up when yearly sales are >12 million.

  • avatar
    tparkit

    Hilarious! Just around the corner are the collapse of China’s bubbles, meltdown of Europe’s welfare state illusion, and global depression… temporarily concealed, in the US, by exploding social entitlement payments and government-subsidized debt. But, hey, the frothy fizz — and the pump-and-dump –comes just before the pop!

  • avatar
    VanillaDude

    Yeah – I agree
    Chevy Cruze
    Hyundai Accent
    Kia Forte
    Ford Focus
    Ford F Series
    VW Jetta
    Toyota Camry
    Nissan Versa

    Buyers will be replacing cars with these kinds of cars. The focus will be on value, reliability and long term investment.

    It will not be big enough to change the trend however.

  • avatar
    Educator(of teachers)Dan

    Hmmmmmmmmmm so Edmunds knows that I would have bought a car back in 2009 if it hadn’t been for my divorce and now they know I’m planning on buying one at some point between July ’12 and Dec ’12? Freaking clarivoyants I tell ya!

  • avatar
    vbofw

    the best stat to show there actually IS pent-up demand is the average life of a car on the road has risen to a new high of 10.6 years. Sure a portion of this is from inevitably better reliability over time, but anybody joking about pent-up demand is uninformed. You can joke about the month-to-month swings in consumer spending, that’s fair. But if there was ever pent-up demand in the U.S., it’s right now.

  • avatar
    Ron

    Of course there is pent-up demand. Maryann Keller, a famous auto analyst, once quipped, “I have pent-up demand for an emerald. And my husband will make sure that it remains pent-up.”

    • 0 avatar
      George B

      Ron, the difference is a car is a necessary tool for life for most Americans. Wouldn’t be surprised if many consumers shift from near-luxury brands to more basic transportation, but eventually Americans will buy replacement cars as old ones wear out. With the insane high prices for used cars, I would also expect proportionally more new cars to be sold in the next few years.

      • 0 avatar
        Ron

        Good point. Historically high used car prices will motivate some people to buy new rather than used. However, that new car purchase “creates” another used car on the market, reducing used car prices, motivating someone else to buy used rather than new. Incidentally, I don’t dispute that there is pent-up demand. Eventually Maryann’s husband did buy her that emerald!

      • 0 avatar
        jmo

        However, that new car purchase “creates” another used car on the market, reducing used car prices,

        True, but not for those $1500 cars that need $2000 worth or repairs, who just get sent to the crusher.

    • 0 avatar
      carbiz

      Maryann Keller? LOL. I bought her book 5 or 6 years ago. I got through maybe one chapter and I literally through it down the chute.
      I’d rather read the Toronto Star for accuracy and objectivity.

    • 0 avatar
      Volt 230

      This reminds me of the “Cast Away” movie, Tom Hanks had years of pent-up and then he gets to go home and the wife is not available, in this case lack of money is the culprit.

  • avatar
    zerofoo

    I’ll believe this when I hear corporations have pent-up demand for employees.

    This is not rocket science. People buy cars and houses when they have good long-term prospects for jobs.

    Without a long significant decline in unemployment/underemployment, we will not see a recovery in the auto or housing market.

    • 0 avatar
      bikegoesbaa

      Corporations do have pent-up demand for employees. How could they not?

      Since the party ended in 2008 most large employers have cut way back on hiring and many have been actively reducing payrolls through buyouts or layoffs. Fewer people taking care of the same workload is the definition of pent-up demand.

      Many companies have been running what amounts to a skeleton crew for the last few years, but are being very careful about adding to it until they get more confidence in the economy. So the demand is there, but the willingness to aggressively reduce it is not.

      Really, I expect that ~9% unemployment is pretty much the new normal and will stay that way for a long time. Remember the bottom 10% of your high school class? Would you want to hire them? Well, neither does anybody else.

      • 0 avatar
        Andy D

        Hey, wade a minnit, I resemble that. The bottom 10%. My mother told the principal that if he did not graduate me, that I would just be back in the fall. I’m gonna postulate that due to the way that %age is is counted, that there is at least twice that many jobless.

    • 0 avatar
      jmo

      I’ll believe this when I hear corporations have pent-up demand for employees.

      They do, for skilled employees – a petroleum engineer in Houston or a (decent) software developer in Boston etc. will be getting several head hunter calls a week.

      • 0 avatar
        bikegoesbaa

        Agreed.

        I’m an engineer, as are most of my friends – in a wide variety of disciplines.

        Right now we all are fielding calls from headhunters and pretty much have our pick of jobs and locations nationwide.

        I’m sure it won’t last forever, but for now it appears that large technical employers are actively trying to (re)build their skilled talent pool.

        They pretty much have to, as a 3-year fear-fest of “never hire anybody and fire as many people as possible” creates a lot of openings, and it’s not possible to maintain a siege mentality indefinitely.

  • avatar
    SilverHawk

    With the world economy seemingly at the precipice, it’s easy to dismiss Edmond’s estimates. This cautious mood is also reflected in the statements of many auto CEOs. But, in fact, there is a general feeling of optimism throughout the industry sales forces that, at least in the short term, consumers will return to the showrooms. This is reflected in the amounts being spent on advertising in the 4th quarter. Even notorious non-spenders like Suzuki are running adds. This spending will continue into the 1st quarter of 2012 to coincide with many new model releases coming in the Spring. How long the mini-demand lasts is, of course, dependent on consumer confidence which can fluctuate from week to week. But for the time being, the mini-bubble is being treated as the real deal.

  • avatar
    Wheatridger

    I’m buying a used car tomorrow. Glad I’m not the only one doing that, or I’d feel like a fool.

    • 0 avatar
      MrWhopee

      But all those people buying used cars tomorrow drive the price up… If there are a lot of people interested in that nice used cars you wanted, the seller’s gonna play hard to get and demand top dollar.

      I think if I’m buying something I’d rather have no one else doing the same so the seller would be more likely to give to my demands…

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