Friday, August 2, 2013

Car sales sailing, but momentum is key

Mark Glover’s AutoGlo car reviews also can be seen on the Business page of The Sacramento Bee’s website – via the “GALLERY: Reviews of new cars” link at www.sacbee.com/business

Sacramento, California – Are we back?  And by we, I mean the folks who sell new motor vehicles in the United States.

Well, not quite.  Prior to the dog days of the recession, you’ll remember that automakers were selling around 17 million new motor vehicles annually.

This just in: Based on seasonally adjusted projections,  automakers are on track to sell around 15.5 million vehicles this year, which would be the best year since about 16.1 million new-car sales were recorded in 2007 … right before things went into the tank.

Figuring out the reversal of fortune does not take a brain wired for rocket science.

Sure, jobs, the stock market and the general fiscal outlook of the nation are on the mend or outright improving.  And yes, people who kept their old clunkers running while they were waiting for better economic times are now heading to the auto lots.  And yes again, automakers and local dealers are cranking out highly alluring, incentive-laced deals on new motor vehicles – deals sweet enough to make even the most determined Scrooge eager to part with his dollars.  Nice lease deals and a continuation of favorably low interest rates also have helped.

In July, automakers selling in the U.S. sold more than 1.3 million new units, up 14 percent over the total amassed in July 2012.

Good news poured out of various corporate offices: General Motors moved 234,071 vehicles in July, up more than 16 percent from the year-ago period.  Toyota’s sales in the U.S. rose 17.3 percent year over year, coming in at 193,394 last month.  Honda’s year-over-year bump up was nearly 21 percent, ringing up new-car cash on 141,439 units.

Chrysler Group, once scolded for lagging behind, sold a solid 140,102 new cars in July, up 11 percent from a year ago.

From the sales floor perspective, yeah, it’s all good.  And many analysts say they expect things to keep humming along through the end of the year.

But as is always the case in the new car sales game, the devil is in the details.

Bandon, Ore.-based CNW Research points out that the industry in July was actually down 6.4 percent from June.  Lumped in those numbers were hefty month-over-month percentage declines for Ford (down 17.8 percent), GM (slipping 11.6 percent) and Chrysler (off 10.7 percent).

Foreign automakers, by comparison, fared much better.

CNW aptly points out that momentum is critical to maintain market share over both the short and long term.  And one does wonder how long the incentive bonanza will go on before automakers start to become concerned with the bottom line.

Time will tell.  It’s hard to argue with the bottom-line sales numbers at this point, but let’s regroup in a few months to see how automakers’ balance sheets are doing in the incentive-laden market.


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