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The headlines are focusing on the fact that August car sales were down 19% from a year ago, but that is a bad comparison because August '09 sales were boosted temporarily by the cash for clunkers program. If instead we compare current sales to April of last year, when the market looked like it had hit bottom, then sales are up at a 17% annualized rate, abstracting from government distortions and the typical monthly noise in this series. Sure, the level of sales remains extremely low, but to me it's clear that sales have risen at a pretty fast pace since the recession ended. Sales have generally been stronger than expected, so this results in some inventory depletion, which then results in some production ramp-ups, which in turn trickles down to more orders from suppliers, etc. This is the way any recovery happens.
7 comments:
I don't know if I'm in the minority, but for 25 years I used to lease a new car every year until all the consumer advocates convinced me to buy a nice used car and drive it until it dies. I have now had my car for about 9 years and don't intend to buy another until the seats fall apart. Perhaps this is what others are doing to some degree.
I bought a used car in 1990. I still have it. 240k miles.
Still, auto sales are one-half of the best years.
I wonder if we are becoming "Japaners." We accept our do-nothing Fed cravenly seeking zero inflation, even as our economy sags and sags.
I travel a lot through the southeast (just returned from a hike in the Appalachains along with some tennis with good friends in Knoxville) and I pay attention to what people drive. I used to see a lot of what I call 12 mpg pickumup trucks running up and down the road. I am seeing fewer of them these days. I see a lot more small sedans, trucks, and small SUVs. People are making the move to more fuel efficient vehicles. This is a trend I think will continue. The gas price spike two years ago stung and people are taking steps to protect themselves. Transportation needs can be postponed but not eliminated. The average American is not going to drive a car until the seats rot.
inventory depletion
Nope (see Table 10) , at least for domestic manufacturers. If anything the inventory sales ratio has been trending up since the spring.
This is a trend I think will continue
Nope (see Table 6). Sales of light trucks first surpassed sales of autos in 2001, the trend reversed in March 2008 but re-reversed in May 2010. Light trucks are now outselling autos.
Anecdote is not the plural of data.
Marmico,
I have re read my post and I still don't see any mention of 'inventories'. What I said was I am seeing more small trucks and fewer large ones. I neither said nor implied the observation was anything other than anecdotal. The trend I said I thought would continue is the one toward more fuel efficient vehicles from less fuel efficient ones. It had NOTHING to do with the relationship between sales of cars and trucks.
It was just a comment. Sorry you did not like it.
My apologies. Your 'inventory depleton' comment was directed at Scott's post. I mistook it for being directed at mine.
Thank you for posting such a useful, impressive and a wicked article./Wow.. looking good!
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