Car Sales Improve: Is the Worst Over?
Reading sales reports from automakers has been a bit of a horror show for the past eight months. Even though the numbers were still negative in a big way last month, there were signs of life.
On the surface of things, March 2009 seems just as abysmal as past months. According to The Associated Press, there was a 37% drop in year-over-year sales overall. In this new post-housing-bubble era, though, it’s more appropriate to compare this month’s sales to last month’s. When you do that, you see that March saw a 25% sales boost over February.
While March is historically a good sales month, March 2009 outperformed the historical average, which is typically a 20% increase, according to AP. The AP attributes the improved sales performance to incentive spending and loosened credit markets.
So are we out of the woods yet? Maybe, maybe not.
Besides the added incentives, the overall fundamentals of the retail car market may be stabilizing. According to Ford economist Emily Kolinski Morris, improvements in housing and consumer confidence may point to consistently brighter sales.
“Based on past performance, these indicators would point to some improvement in the vehicle sales pace in roughly three months’ time,” she said.
According to The Wall Street Journal, the annualized sales pace in March was 9.86 million, which is the best so far this year and much better than February’s 9.12 million rate. Keep in mind that analysts like Automotive News predicted that March would be even worse than February – about 8.9 million units. Neither number comes close to historic high rates of 16 and 17 million sales in 2007, but at this stage, many are looking for any indication that the worst is over.
