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Auto Sales Helped Get the American Economy off to a Good Start

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The Commerce Department released a report on Thursday indicating that spending on automobiles and parts increased by almost 13% in the first quarter, significantly contributing to the rise in gross domestic product. Solid deals of new and utilized vehicles were impelled by shoppers who had deferred buys before in the pandemic and by other people who — in light of the infection — needed to depend less on open travel or shared transportation administrations like Uber.

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A significant factor was the two rounds of stimulus payments made since late December. Consumers were also made more comfortable by low interest rates, easy access to credit, rising stock and home prices, and high trade-in values for used cars.

In fact, the auto industry was able to post healthy results despite a shortage of computer chips that forced many auto plants to temporarily shut down due to strong demand in the first quarter.

Edmunds.com, an auto-sales data provider, reports that the number of new cars and light trucks sold increased by 11% from the same time last year to 3.9 million.

Ford Motor reported its highest quarterly profit since 2011 on Wednesday, totaling $3.3 billion. According to Edmunds, the average selling price of Ford models increased to $47,858, 8 percent higher than in the first quarter a year ago, despite the fact that Ford produced 200,000 fewer vehicles than was planned for the period.

For auto retailers, the combination of strong consumer demand and limited inventory, which is in part due to the chip shortage, has produced something of a dream scenario. The largest dealership chain in the nation, AutoNation, sells many vehicles before they even leave the factory at or near the sticker price.

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The CEO, Mike Jackson, stated, “I’ve never seen so much preselling of shipments.” These automobiles enter and leave immediately.

AutoNation reported a profit of $239 million in the first quarter, with revenue rising 27% to $5.9 billion. That was a circle back from a misfortune a year prior, when the pandemic pleated deals and constrained AutoNation to shut down stores.

 

Neal E. Boudette has covered the auto industry for two decades and is based in Michigan. After working at The Wall Street Journal for more than 15 years, he joined The New York Times in 2016.

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