Wednesday, February 4, 2009

9.5 Million

The Lehmann Letter ©

The Bureau of Economic Analysis today released its report on January motor-vehicle sales.

You can obtain the report and the latest data by:

Step 1: Click on
Step 2: Click on "Gross Domestic Product" under "National"
Step 3: Scroll down and click on "Motor Vehicles" under "Supplemental Estimates"
Step 4: Save to your desktop as an Excel file and then open the file
Step 5: Click on the "Table 6" tab at the bottom of the page
Step 6: Look at column I (Light Total) and scroll down for the latest data

If you examine the data, you’ll see that 9.5 million new vehicles were sold in January at a seasonally-adjusted annual rate. Put that figure in perspective by using it to update the following chart.

New-Vehicle Sales

(Click on chart to enlarge)

Recessions shaded

Sales are now little more than half the level that had been customary earlier in the decade. It’s been 25 years since sales were below 10 million. And, as you can see, at no time over the past 40 years have new-vehicle sales fallen substantially below 10 million for any length of time. Should sales continue to drop and not recover soon, the industry will have a disaster on its hands.

But it’s not just the auto industry that is at risk. Think of the steel, glass, upholstery and rubber tires that are incorporated in the finished product. Think of the myriad parts and sub-assemblies included in engines, suspensions, braking systems and electrical systems, many purchased from legions of suppliers. The fortunes of an entire bloc of industries rises and falls with new-vehicle sales.

The latest data emphasize the urgent need for an auto-industry rescue package. They also highlight the dire straits in which the entire economy finds itself.

© 2009 Michael B. Lehmann

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