To say that the U.S. auto sector continues to bleed may be an understatement. Maybe we should start talking about a severed artery.
Sales of domestically manufactured cars in October were down 27% from a year ago, while domestic light trucks (which includes the SUV category) were down 40%.
“If you adjust for population growth, it’s the worst sales month in the post-World War II era” for the industry, said Mike DiGiovanni, GM’s chief sales analyst, on a conference call. “Clearly we’re in a dire situation.”
So much for the theory that plunging gasoline prices would bring buyers back to the SUV lots.
Rising gasoline prices earlier this year unquestionably contributed to the slide of domestic autos in general and SUVs in particular in the spring and summer, and the lost income and jobs that resulted may have been the factor that tipped the economic slowdown into a recession. But national losses in jobs, income, and consumer confidence are now exerting a separate influence of their own, as consumers cut back wherever they can. Domestic automakers take the brunt of that second, more damaging blow as well.
Lost income from motor vehicles and parts subtracted 64 basis points from the 2008:Q2 GDP growth rate (quoted at an annual rate), and took another 80 basis points away from quarter 3 (see BEA Table 1.5.2). Today’s numbers suggest that the fourth quarter is going to be significantly worse than that.
Originally published at Econbrowser and reproduced here with the author’s permission.