March auto sales

Light vehicles sold in the U.S. last month were down 37% from March 2008, whereas February sales had been 41% below year-earlier values. Does a February-to-March increase and smaller year-over-year drop mean that we’ve turned the corner?

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I think not. Although Americans bought 168,000 more light vehicles in March than in February, the average February-to-March gain over the last five years has been 247,000 additional units. The main reason that the March ’08 to March ’09 comparison sounds like an improvement over February ’08 to February ’09 is that March ’08 was the beginning of the big downturn in auto sales. From that fact alone, we should continue to see improving year-over-year comparisons in subsequent months, particularly for domestically manufactured light trucks, the segment hit hardest by last spring and summer’s gasoline price spike.

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Detroit needs to sell more vehicles, not have smaller year-over-year drops, to remain viable.

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Nonetheless, the Wall Street Journal found some optimism to report:

“I believe we are in a bottoming process for the industry,” Bob Carter, a group vice president at Toyota Motor Corp., said in a conference call. Mr. Carter said the company’s 18% sales improvement in March compared with February could be “a very early indication that we have floored and some optimism is starting to return to the market.”

Michael DiGiovanni, the top sales analyst at General Motors Corp., said he expects a “very, very gradual pickup” in vehicle sales in the second quarter. He cited “the first signs of brightening” in the market. Jim Press, Chrysler LLC’s vice chairman and president, said, “The market is starting to show small signs of life which need to be nourished like seedlings”….

Positive signs also include rising used car prices, more cash buyers in the market and the expected return of the government and other large-scale vehicle buyers that will be boosting fleet sales, Ford officials said.

I’m certainly ready to cheer some good news when we get some. But I don’t see much basis for that in the March sales numbers.


Originally published at Econbrowser and reproduced here with the author’s permission.