Looking at the vehicle sales, at first glance it seems they have evolved from disastrous to almost fully recovering pre-recession levels.
What dynamic is driving this sales recovery?
Figure 1 - Total Vehicle Sales
Factors affecting vehicle sales appear offsetting:
- there should be at least a 15 million vehicle pent up demand since the beginning of 2007;
- vehicles are lasting longer and are more durable;
- the median consumer is poorer;
- current models have much better fuel consumption, and depending on miles driven, a new car may pay for itself in fuel savings.
- half the vehicles (by sales price) are purchased by businesses which were seeing record profits.
Of course per capita vehicle sales still remains at recessionary levels.
Figure 2 - Per Capita Sales of Vehicles
Inventories have been growing, and are above pre-recession levels (current dollars) - but price inflation since 2000 has been mild. One reason that price inflation per vehicle sold has been minimal is the trend from steak to hamburger.
Figure 3 - Index, Value of Inventories (red line) and Price Inflation (blue line)
It is interesting that used vehicles sales have been declining.
Figure 4 - Used Vehicle Sales
Imported car sales have been trending down. My opinion is that productivity (aka robotics) improvements now favor USA production.
Figure 5 - Ratio of Imported Autos to Domestic Autos Sold
Man-hours per auto have fallen by 1/4 since 2004 for USA production.
Figure 6 - Man-hours Per Auto
I am a trend kind of guy. A trend remains in play until it ends - and there are no apparent dynamics which suggests vehicle sales trend will not continue to improve.
Friday's job report has everyone running around. My thoughts in my instablog along with a wrap of this week's economic releases.