Loading...
Symbols:
Authors:

Is This a Rebound for Autos?

by: James Hamilton September 07, 2008 | about stocks: F / GM    

James Hamilton

About this author:
Become a Contributor Submit an Article
  • Font Size:
  • Print

August auto sales were less dismal than July. But don't uncork the champagne quite yet.

The New York Times reports:

Domestic sales declined by 15.5 percent in August compared with the previous year, the fifth consecutive month of double-digit declines, despite some relief in recent weeks on gas prices.

I like to look at these data using graphs like the ones below, to help distinguish seasonal and cyclical factors from trend. (By the way, Econbrowser remains the only site on the web, to my knowledge, where you will find the auto data displayed this way.) You can make year-on-year comparisons by looking across entries within any given set of columns, and see month-to-month changes by looking across groups of columns.

Data source: Wardsauto.com
dom_trucks_sep_08.gif

Sales of light trucks (which includes SUVs) manufactured in North America were clobbered this summer, and August 2008 was down 22% from August 2007. But August domestic truck sales were up 23% compared with July 2008, and you can't describe any significant chunk of that July-to-August improvement as a typical seasonal movement.

Data source: Wardsauto.com
dom_cars_sep_08.gif

August sales of domestic cars were down 12% year-over-year but up 6.6% month-over-month. The dramatic drop in gasoline prices thus appears to have reversed some of Detroit's hemorrhaging.

U.S. average retail gasoline price. Source: NewJerseyGasPrices.com.
gas_price_sep_08.png

Spencer at Angry Bear is encouraged by the uptick in seasonally adjusted auto sales and wonders if we've passed the bottom. The NYT quotes analysts from GM (GM) and Ford (F) as cautiously optimistic.

I am less so. For one thing, even though gasoline prices are lower than they were a month ago, they're still much higher than the last time you bought a car. The swing away from SUVs is in my opinion inexorable, and will continue even if we see, as we may well, significant further declines in oil prices. And there is no way that works to the benefit of the American companies whose market strength has always been in the less fuel-efficient vehicles.

Second, if I'm reading things correctly, the U.S. economic downturn can now be classified as a recession. I don't share the views of those who think we may have seen the bottom there, either. Exports, the key sector that's been keeping GDP growth positive, are significantly threatened by a slowing world economy. And have we turned the corner on the financial mess? If that's how you read the latest developments with Fannie and Freddie, then God bless your cheerful spirit.

I'm expecting job and income losses to continue, and that doesn't bode well for auto sales, no matter what's been happening or may be about to happen to gasoline prices.

Related Articles

This article has 7 comments:

  •  
    Sep 07 10:04 AM
    House going into Repo ..... financing on all that buy now pay later furniture coming due ...... layoffs down at the plant....

    "Hey, lets go buy a new car" ........ NOT!

    Car sales make a good barometer of how tough a time the consumer is really having.
    Reply
  •  
    Sep 07 11:58 AM
    You're not reading things correctly. A recession is formally defined by the economics community as two consecutive quarters of negative GDP. (But since we change things all the time these days in America to suit our whims, you could say we're in a recession. Why not? Reporters do all the time. Too bad they didn't have to pass their other classes, or their instructors didn't know the answers, either.)
    Reply
  •  
    Sep 07 12:07 PM
    What IS remarkable about our current economic malaise is that vehicle sales are doing as well as they are, especially with large numbers of fleet sales, leases and subprime credit largely out of the mix. AMAZING is more like it.

    (MAYBE the overall economy is doing considerably better than you think, despite the news media's BEST EFFORTS to paint the bleakest picture possible to elect You Know Who to the Congress and White House.)
    Reply
  •  
    Sep 07 09:26 PM
    paulk, you'd better watch out our you are going to join CLH, Brian Pursley, and phinsuntanning in the SA hall of shame.
    Reply
  •  
    Sep 08 08:31 AM
    Almost everybody still needs a car. They are just putting off the purchase till they absolutly need one.
    Reply
  •  
    Sep 08 08:33 AM
    In addition, they are looking for more fuel economy. I just sold the SUV and bought economical. The montly fuel savings more than paid the difference in monthly car payment. Now giving my money to the car company instead of the oil company.....
    Reply
  •  
    Sep 12 03:17 AM
    Yes I totally agree with you , it becomes a need of everyone.

    ------------

    brianna

    [url=www.gov-auctions.org]Auto Auctions[/url]
    Reply
More Comments on GM ยป
More by James Hamilton

Investment Resources
Money Management 

Research 

Seeking Alpha provides these ads as a service to its leading contributors
Articles on related themes
Autos 

Aircraft & Parts 

Airlines 

Rail Transport