Wednesday, April 4, 2012

Auto Sales: When Less Is More

The Lehmann Letter (SM)

This letter usually relies on the Department of Commerce for its auto-sales data. But those data are not yet available for March. So let's turn to an article in today's New York Times:

“U.S. Car Sales Keep Up Their Firm Growth”

The headline is upbeat and the fifth paragraph is, too:

“Many analysts say they are confident that United States sales for all of 2012 will surpass 14 million vehicles, a target that seemed overly optimistic several months ago. In contrast, industry sales were 12.8 million last year and 10.4 million in 2009.”

While the eighth paragraph reports the latest data:

“The industry’s seasonally adjusted, annualized selling rate increased to 14.4 million in March, from 13.1 million a year ago, according to the industry tracking firm Autodata. The selling rate for the first quarter was 14.5 million, the highest since 2008.”

This is encouraging. But a look at the chart, which puts matters in historical perspective, generates caution.

New-Vehicle Sales
(Click on chart to enlarge)

(Recessions shaded)

You can see that February sales reached 15 million, showing strong growth since the depths of the recession. March sales were 14.4 million, a slight setback to that growth trend that seems insignificant when you notice the many minor fluctuations in the graph.

But the article says many analysts are confident that sales will surpass 14 million for all of 2012. If that means sales will be less than 15 million for 2012, that would definitely interrupt the upward trend.

The chart shows that the industry enjoyed 17 million in sales from 2000 to 2005. The hope had been that we were on our way toward that number. Let's also hope that February's 15 million was part of the trend and not just a fluke.

(To be fully informed visit

© 2012 Michael B. Lehmann

No comments: