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CNW: Pent-Up Demand Beginning to Dwindle

July 23, 2014

BANDON, Ore. — Pent-up demand hit a low point this month, according to CNW Research. The firm estimates that 94,000 consumers are looking to make a vehicle acquisition within six months vs. 103,500 a year ago.

For the auto industry, this year has been one of drawing down high levels of pent-up demand, the firm reported. In January and February, there was an 8% to 11% increase vs. 2013 in the number of consumers who were ready and willing to make a new-vehicle acquisition. All other months, however, saw the gap between last year and this year diminishing.

“These lower numbers can be offset by only a few actions on the part of automakers, the most often turned to being more discounts to get fresh potential customers to buy earlier than they intended or simply enter the market for a new car or truck,” wrote Art Spinella in his firm’s monthly enewsletter. “Needless to say, this is expensive and disruptive to the bottom line.”

Spinella predicted that the industry will have to face the problem of low pent-up demand in the next two years. “With more than 95% of all new vehicles now under some sort of incentive compared to under 70% in prerecession times, automakers will have to continue spending massive dollars to draw new customers and rely less on pent-up demand.”

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