By on October 25, 2009

Newton was right after all. Picture courtesy viper.haque.net

Prepare yourself for an increasing number of „good news“ along the following lines:

„October U.S. auto sales should be down about 6 percent from a year ago, marking the first single-digit monthly decline since May 2008, industry forecasting firm J.D. Power and Associates said on Friday.” Glad tidings, brought to you by Reuters.

Times must be really bad when single digit declines are feted as an improvement.

In reality, things stay as bad as they have been all year. In September 2008, the bottom fell out of the light vehicle market. From now on out, monthly sales will be compared to hell.

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September 2008 sales were 27 percent below September 2007 sales. October 2008 sales were 32 percent below October 2007 sales. Anything compared to that will look like growth. Hopefully.

J.D. Power can’t ignore that fact, but paints it in rosy colors: “While year-over-year comparisons benefit from a low selling base in October 2008, improvements in consumer confidence and credit are propelling the return to positive sales gains relative to last year,” said Power’s Gary Dilts. Positive sales gains relative to last year? Where? When?

Positive sales gains relative to last year are just around the corner.

TTAC is prognosticating that in January 2010, a huge turn-around will be feted. Why? January 2010 will be compared to the all-time nuclear winter type January 2009, when sales were a dismal 656,881 units. We are equally prognosticating that February 2010 will even be better. February 2010 compares with a February 2009 when light vehicle sales had cratered by 41 percent.

The Seasonally Adjusted Average Rate (SAAR) paints a more precise (and horrendous) picture. SAAR was below 10m for most of the year. It jumped to 13.7m in August 2009, with a kick in the butt by Cash-for-Clunkers. When the amphetamine wore off, SAAR was at 9.5m again in September. The way things stand, America will be lucky if the year will end a tad above 10m light vehicles sold.

Want really good news? Robert Farago had prognosticated (and wagered) that the year will end with just 8.5m cars sold. Prepare yourself for this headline:

”Car sales improve 17 percent over Farago forcast!”

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19 Comments on “American Editorial: Huzzah! First Single-Digit Drop In 17 Months!...”


  • avatar
    Autosavant

    $3 billion and 700,000 perfectly good cars and trucks wasted in the CFC, and where are we now? Back to the bottom.

    Corrupt, Econ Illiterate Porkmeister clowns in Congress…

  • avatar
    new caledonia

    Someone tell J.D. Power that a decline in the rate of decline is not a gain.

    Does no one study calculus any more?

  • avatar
    carguy

    The relative merits of being run over by a 10 tonne truck instead of a 30 tonne truck.

  • avatar
    johnthacker

    Someone tell J.D. Power that a decline in the rate of decline is not a gain.

    Cheering the second derivative is common. It’s what they’ve been doing with jobs/unemployment recently.

  • avatar
    whisperquiet

    As they say:

    Figures lie and liars figure.

  • avatar
    drifter


    $3 billion and 700,000 perfectly good cars and trucks wasted in the CFC, and where are we now? Back to the bottom.

    Corrupt, Econ Illiterate Porkmeister clowns in Congress…

    $3 billion last merely a 1 week in Iraq. On the positive side, no American deaths directly related to CFC has been reported yet.

  • avatar
    mpresley

    Why should Powers cheer lead the Obama economy? But I guess they are. How much longer will we have to read that things could be worse than they are? And, for that matter, how much longer can this guy get away with blaming his problems on that lamebrain, George Bush? Will he still be running against Bush/Cheney in Oh 12? Probably time for another C4C boondoggle. There’s got to be some more old cars out there, somewhere…

  • avatar
    lahru

    Here is the deal, 15% of the new car market was easy credit, another 15% was upside downers obtaining financing and they are not coming back anytime soon.

    Another 15% are the folks who are repairing instead of buying. That is 45% of the market.

    SAR was what? 16.3 to 17 million at the peak.

    Taking into account all of the negatives regarding the economy one would eer on the side of people forgoing a new vehicle purchase rather then assuming a new payment.

    I’m thinking 9 mill.

  • avatar
    PeteMoran

    @ new caledonia / johnthacker

    Are you suggesting rate of change should not be considered?

  • avatar
    new caledonia

    @PeteMoran –

    Not at all. A decrease in the rate of decline is an indicator that you are getting close to hitting bottom, but you have hit bottom yet. That may be “light at the end f the tunnel,” but it is not a “positive sales gain.”

  • avatar
    Pch101

    If you look at the chart, you can see that things started falling apart in spring 2008 — the summer sales season never materialized that year — and that 2009 has largely been a plateau, but for Cash for Clunkers.

    The current plateau suggests that a bottom in being putting in right now. Things aren’t really getting any worse, they’re bottoming out. It’s a matter of time before sales improve above current levels, although the customary winter sales dip that should be forthcoming may make obscure that.

  • avatar
    Via Nocturna

    If it is possible to type through clenched teeth, that’s what I do every time the topic of C4C comes up. Yeah, I’m still bitter. The proof’s in the pudding–after the August-September spike, look where sales are. That’s right, back on the plateau of misery that is the auto market circa 2009. The current sales are even lower than they were in the months leading up to C4C!

  • avatar
    cdotson

    I remember back before the market went to hell in a handbasket all of TTAC’s coverage of future model introductions alluded to vehicles making their debut in “the most magical of automotive years: 2010.”

    If the market turns around and actually grows next year that will be most magical.

  • avatar

    I’ve always hated that car sales are compared to a year ago. That does no good when the bottom falls out of the market like last year. For a long time, that didn’t tell us if the car market was continuing to do worse or if it had leveled off. I want to know month to month and even compared to the last several months as well.

  • avatar
    John Horner

    At the beginning of this year I said that 10-11 million units per year would likely be the new normal for a good long time as the market has to sop up the excess vehicles which had been bought over the past many years. The US is a replacement market for cars and trucks. The scrap rate has been running at 11-12 million units per year for quite some time. Ergo, 11-12 million units per year is thus the real demand. We are going to have to spend some significant amount of time below the scrap replacement rate in order to soak up all the excess vehicles which were bought during the crazy days.

    Sure the US’ population is growing, albeit slowly. But, most of the growth is in urban areas and all of the growth is in the very lowest income tiers of society. Low income, urban dwellers are not new car buyers.

    China, India and other developing markets are where all the growth action is because they have new customers coming into automotive ownership.

    Japan, Western Europe and North America are all flat-to-down unit volume markets and will be for a long time, maybe forever.

    BTW, C4C did a brilliant job of clearing the massive inventory logjam off the dealer lots and car company storage lots. That inventory had to be cleared off in order to get anyone back to work in the factories building for the new lower level market. Like it or not, it worked.

  • avatar
    psarhjinian

    If you destroy the earning and spending ability of the middle class, you’re going to feel pain for a long time, hence the reason we spent money to avoid further mass erosion of jobs and consumer power.

    CFC, the bailouts, etc, are proactive measures. The alternative would be to metaphorically close your eyes, put your fingers in your ears, hum, and pretend that the loss of tax revenue and increased demand on the social safety net is due to a lack of moral fibre on the part of the unemployed.

  • avatar
    Autosavant

    “Author: John Horner
    Comment:
    At the beginning of this year I said that 10-11 million units per year would likely be the new normal for a good long time as the market has to sop up the excess vehicles which had been bought over the past many years.”

    That time could be only 2-3 years, if the economy returns to a very healthy state eventually.

    The US is a replacement market for cars and trucks. The scrap rate has been running at 11-12 million units per year for quite some time. Ergo, 11-12 million units per year is thus the real demand.”

    This may be the replacement demand, but not the total, which should be higher or much higher.

    “Sure the US’ population is growing, albeit slowly. But, most of the growth is in urban areas and all of the growth is in the very lowest income tiers of society. Low income, urban dwellers are not new car buyers.”

    Not true, the growth is considerable, and it is also in affluent areas. Even if you do not include immigration, the US population growth is very healthy, in fact the healthiest of any major advanced economy. That is why we are 312 million today, and will be 400 million in less than 30 years, at our 1%+ annual growth. And if you add immigration, even more.

    China, India and other developing markets are where all the growth action is because they have new customers coming into automotive ownership.

    That is natural and expected. China is far, far ahead of bureaucratic india in every respect, not really comparable, Car sales in India today are 1/5th of Chinese or US car sales. AND the cheap Nano production, which may change all that, is going very very slow, now at less than 30,000 units a year, instead of the 3 million it should be!

    But sure, cars per 1000 citizens are still quite low in China and much, much lower in india, so if China continues its amazing growth and india shapes up and stays serious about it, could be another china 10-20 years from now.

  • avatar
    BDB

    ill he still be running against Bush/Cheney in Oh 12

    You guys still b**ch about Jimmy Carter, an (at worst) slightly below average President who was elected thirty-four years ago.

    So expect to hear a lot about the fourth from worst President in American history for a little while longer (the only ones worse than Dubya being Buchanan, Andrew Johnson, Harding, and Hoover).

  • avatar
    gslippy

    @psarhjinian:

    CFC, the bailouts, etc, are proactive measures. The alternative would be to metaphorically close your eyes, put your fingers in your ears, hum, and pretend that the loss of tax revenue and increased demand on the social safety net is due to a lack of moral fibre on the part of the unemployed.

    Gotta disagree with that last part. I was once unemployed, and it was only my fault to the extent that I chose to join a startup firm with a weak business plan. So I don’t entirely blame the unemployed.

    Having said that, the increasing unemployment among UAW people is in part their collective fault, for constantly biting the hand that feeds them.

    Mostly, however, I would blame the death of the auto companies on management and their abandonment of the responsibility that comes with it – integrity, leadership, marketing, vision, humility, and backbone. Unfortunately, the middle class tax revenues used to governmentally-fund the continued misadventures of Detroit will never return, and so the middle class will end up poorer as a result. This was not investment; it was an expense.

    So while I understand the joy over a slowing descent, many planes have hit the ground while pulling out of a dive.


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