DETROIT -

Sparking what he believes will be double-digit percentage gains for new-vehicle sales, Paul Taylor, chief economist of the National Automobile Dealers Association, rattled off five factors he expects to ignite that growth.

“The auto industry is coming back strong from what has been a difficult economy,” Taylor projected. “Auto sales are playing a key role in leading the economic recovery.”

With the average age of vehicles on the road today at more than 10 years old, Taylor insisted Americans will need to replace their aging units. This fact, combined with low financing rates and wider credit availability, prompted Taylor to forecast new-vehicle sales growth of nearly 12 percent this year

“Sales will reach 12.9 million new-cars and trucks in 2011,” Taylor speculated.

Last year, NADA determined 11.55 million light vehicles were sold.

Here are Taylor’s five reasons for making such a sales performance prediction:

More New-Vehicle Choices

The association pointed out manufacturers are producing a wide variety of new cars and trucks that are headed to dealer showrooms.

This week, for example, NADA mentioned the North American International Auto Show in Detroit will display more than 700 new units representing more than 50 domestic and international brands from the revitalized automakers in Detroit as well as almost all major Asian and European companies.

NADA also noted the show will include many new hybrid and electric vehicles as well as sedans, crossovers and SUVs with more fuel-efficient combustion engines, including several new models from China.

“The worldwide debut of nearly 40 cars and trucks at the show in Detroit is a strong indicator that the auto industry is making a comeback and will lead to increased manufacturer production and sales in 2011,” Taylor offered.

“A revitalized auto industry benefits everyone — every consumer, every dealer and every manufacturer,” he added.

Available Credit at Historically Low Interest Rates

Taylor began by stating, “Credit availability at a time of very low interest rates will drive new-vehicle sales this year.”

NADA recounted that the Federal Reserve Board at its last meeting indicated performance of the economy is “likely to warrant exceptionally low levels for the federal funds rate for an extended period.” Taylor explained this means that automaker finance companies and other lenders will be in a position to offer very attractive financing rates on new-vehicle loans.

“Recovering world market conditions and the Federal Reserve’s current policy will accelerate the recovery of new-car and truck sales in 2011,” Taylor asserted.

“Concern about federal budget deficits and long-term inflation may contribute to higher 30-year fixed rate mortgage rates, but loan rates for car loans four to six years long are likely to see only modest increases over the next year as the economy grows,” he continued.

“Federal regulators need to make sure that loans continue to be approved for car shoppers with reasonable credit,” Taylor added.

Tax Certainty Leads to Economic Growth

NADA thinks the extension of tax policy — often called the “Bush tax cuts” — by Congress in December, combined with the budget extension to fund the government, will provide at least a two-year horizon for business investment and consumer planning that should bolster economic growth.

Stock Market Rise Boosts Luxury Vehicle Sales

NADA recalled the Dow Jones Industrial Average and S&P 500 index closed in mid-December at their highest levels since September 2008.

“Continued stock market gains will boost luxury car sales this year,” according to Taylor.

“Already strong sales of luxury vehicles have been assisted by stock market gains,” he went on to say. “Stock performance influences those who own significant amounts of stock outside of retirement programs, and who buy most of the new luxury vehicles.” 

Rising Gasoline Prices Expand Vehicle Sales Mix

As the price at the pump creeps higher, Taylor says that “While never good for the economy, higher gas prices increase consumer demand for small cars, hybrid vehicles and diesels. New cars are more fuel efficient.”

NADA noted many industry analysts are predicting that gasoline prices will exceed $3.50 a gallon early this year. In the summer of 2008, gasoline prices hit record levels of more than $4 a gallon.

Taylor projects that higher gasoline prices will also increase demand for the more expensive hybrids that typically languish on dealer lots when gasoline prices are lower. He believes sales of diesel cars and trucks will increase as well.

“In the first quarter of 2011 and beyond, new gasoline and diesel hybrid cars and light trucks entering the market will get a stronger look from consumers concerned by high gasoline prices,” Taylor indicated.

“According to the NADA Used Car Guide, the value of small cars and hybrids during times of high fuel prices will increase in the used-vehicle market, and values for large vehicles in the light-truck segment, such as truck-based SUVs, will moderate,” he added.

Looking back again at 2010 sales, NADA calculated the performance was led by crossover utility vehicles, which accounted for about 25 percent of U.S. total. The association also mentioned CUV sales, which grew by about 24 percent last year, more than doubled the growth rate of overall new-vehicle sales nationwide.

“CUVs and hybrid CUVs are clearly the vehicles of the future, and are represented by a large number of production and concept vehicles on display at the auto show in Detroit,” Taylor concluded.