Yesterday The New York Times reported new-vehicle sales across the U.S. were stronger than expected in January, signaling what could be the best year for the auto industry since 2007.
According to a report published by Reuters in December of 2011, auto industry gains for the last quarter of the year may have reflected a change in the mindset of potential buyers, a trend that may in part explain the figures released yesterday. Jesse Toprak, an analyst for TrueCar.com, put it this way: “The biggest change in the consumer attitude is that a lot of consumers are now realizing this uncertainty in the market is not going to disappear completely any time soon. It’s a big mind shift, which is positive for the industry.”
There’s encouraging news in the types of vehicles being purchased, too. Pickup truck sales were up in November. Sales of pickup trucks are regularly monitored as a bellwether of small business growth and confidence. Sales for Ford’s F-Series were up 24 percent, while at GM, sales for Chevy Silverado and GMC Sierra trucks were up 31 percent.
Better than average auto industry sales may be the result of a number of factors, including an aging population of vehicles on the road and a modest increase in the trade-in value of used cars. As a portion of overall U.S. consumer spending, long-term average consumer spending on vehicles has typically hovered near 6 percent. Going into November of 2011, that figure was down to 3.5 percent. Reuters terms the disparity as reflecting a “pent-up demand.”
John Humphrey, the senior vice president of global automotive operations at J.D. Powers said in a recent press release: “Vehicles are currently remaining on dealer lots for fewer than 50 days on average, which is the lowest level for January for the past several years. This is a good indication that pent-up demand is beginning to return to the market.” As reported by Automotive News, U.S. auto sales rose 11 percent in January.
Bunkley, Nick . “In a Surprise, Car Sales Start New Year Strongly.” The New York Times. 2/1/12. (2/1/12). http://www.nytimes.com/2012/02/02/business/chrysler-and-ford-car-sales-improve.html?_r=1&ref=business
Horwich, Jeff. “Ford, Chrysler gain despite Weak Economy.” 7/26/11. (2/1/12). http://www.marketplace.org/topics/business/ford-chrysler-gain-despite-weak-economy
Padgett, Marty. “January 2012 Car Sales Are Strong–Except At GM.” 2/1/12. (2/1/12). http://www.thecarconnection.com/news/1072422_january-2012-car-sales-are-strong–except-at-gm
Woodall, Bernie and Deepa Seetharaman. “Auto Sales Rise to Near ATwo-year High.” 12/1/11. Reuters. (2/1/12). http://www.reuters.com/article/2011/12/02/us-autos-sales-idUSTRE7B01Q120111202