Americans are buying more new cars than ever before.
U.S. auto sales hit a record high of 17.47 million in 2015, topping the old record of 17.35 million set in 2000. Analysts expect sales could go even higher this year as unemployment continues to decline and more young buyers enter the market.
Automakers reported December and full-year sales Tuesday.
Low gas prices and historically low interest rates left more money in buyers' pockets. Nationwide, gas prices ended the year at an average of $2 per gallon, according to AAA. And while the Federal Reserve raised a key interest rate in December, it remains near zero. By comparison, that rate was 6.2 percent in 2000.
Oliver Strauss, the chief economist at car buying site TrueCar.com, says the interest rate would have to reach 3 percent before it would cause car sales to stagnate.
Employment numbers also improved last year, so more buyers — particularly the huge generation of under-34 millennials — found they could finally afford a new car. People who held off purchases during the recession were also lured back into the market by enticing new vehicles like the Jeep Cherokee and the revamped Ford F-150 pickup. Ford sold 780,354 F-Series trucks last year — more than one every minute — making it the nation's top-selling vehicle.
Analysts say the growth should continue this year, but at a slower pace. One reason: Millions of cars will be coming off of two- and three-year leases and into the used car market, so some buyers who would have purchased new cars will go for used ones instead. New-vehicle sales could rise as much as 3 percent to 18 million, says Kelley Blue Book. That's half the pace of 2015, when full-year sales were up 6 percent.
Here are more details of 2015 sales:
WINNERS AND LOSERS: General Motors led all automakers in the U.S. last year, with sales up 5 percent to just over 3 million cars and trucks. Ford was the best-selling individual brand for the sixth straight year, with sales of just over 2.5 million. Volkswagen, meanwhile, saw sales plummet after it admitted in September that its diesel cars cheated on U.S. emissions tests. VW's sales fell 5 percent for the year.
SUV LOVE AFFAIR: As gas prices fell, Americans upsized. This fall, small SUVs became the largest segment of the market, at 14 percent, beating out small and midsize cars, KBB said. Unlike 2000, when the midsize Ford Explorer SUV was the nation's third-best seller, small SUVs like the Honda CR-V are the now the vehicle of choice. Honda sold more than 900 CR-Vs every day in 2015; sales of the Nissan Rogue small SUV jumped 44 percent.
FUEL EFFICIENCY BLUES: Low gas prices also have a victim: Small cars, hybrids and electrics. Sales of Nissan's Leaf electric car dropped 43 percent last year to just over 17,000, while Toyota Prius hybrid sales fell 11 percent to around 185,000. Subcompact cars were also hurting. Chevrolet Sonic sales fell 31 percent for the year.
LAP OF LUXURY: Mercedes-Benz took the crown as the top-selling luxury brand in 2015. Mercedes' sales rose 4 percent to 380,461, a U.S. record for the brand. BMW and Lexus were close behind. Even during the recession, luxury vehicle sales held steady, never dropping below 12 percent of the U.S. auto market. Now, with more lower-priced luxury vehicles on the market like the Mercedes CLA-Class, luxury sales are rising. Luxury vehicles made up 15 percent of sales in December and are expected to make up around 13 percent of total U.S. sales in 2015, according to Kelley Blue Book.
DECEMBER TO REMEMBER: It was the best December in history for the U.S. auto industry, with sales of 1.6 million cars and trucks. Warm weather helped, along with the usual round of holiday promotions. TrueCar.com said incentive spending rose 4 percent over last December to an average of $3,063 per vehicle.
Toyota's U.S. sales rose 11 percent over last December. Honda's sales gained 10 percent, while Nissan's were up 19 percent. GM's U.S. sales rose 6 percent, Ford's were up 8 percent and Fiat Chrysler's sales jumped 13 percent. Hyundai's sales were down 1.5 percent, while Volkswagen's sales fell 9 percent.