January Auto Sales Were Pathetic

According to Briefing.com, there was significant softness in the auto sector for January. This is having a negative impact on the sector. None of this seems to be a surprise, does it? Click to enlarge:

Here is their take:

Highlights
-January domestic light vehicle sales 11.7 mln (-6%).

Key Factors
-Poor start to the new year with a -6% decline from December and -8% from a year ago. Weakest pace since July
-Total sales (domestic and imports) ran at a 15.2 mln pace, also the weakest since July
-Compares to average domestic sales of 12.4 mln in 2007, 12.8 mln in 2006.
-Domestic autos fell -8% to 5.1 mln, light trucks -5% to 6.6 mln.
-Imports held at a 23% market share. Averaged : 23% average in ‘07, 22% in ‘06 and 20% in ‘05.
-With 20% of the weight in retail sales, growth in vehicle sales have a significant effect on sales.

Big Picture
Domestic vehicle sales are slowing due partly to stronger import demand and more largely to slower consumer spending on big ticket items. January domestic sales of 11.7 mln compare to a 12.4 mln average in 2007 and 12.8 mln in 2006. Incentives provide some monthly swing amid the downward trend.

High gasoline prices provide the advantage to fuel efficient imports and domestic autos but SUV sales have not shown a strong decline given the larger discounts awarded and domestic preferences. Foreign market share has grown to 23% in 2007 at the expense of U.S. manufacturers. With a 20% weight in retail sales, vehicles provide the monthly swing to consumer spending.

Comments

[vboring]

how can you discuss auto sales without even mentioning credit?

virtually all new vehicle sales are financed, often by a second mortgage or similar product.

it seems likely that new vehicle sales are likely to be impacted by the credit industry problems: increasing lending standards, decreasing housing wealth, etc.

[gatekeeper]

This was a terrific recap and I cited it in an internal business meeting at the time. I hope you'll do one of these very candid auto recaps every (end of) month. Brief, very candid, well researched, to the point.