Accurate RL: U.S. New Car Market Has Fallen Off a Cliff

Benjamin Franklin said it’s better to be a pessimist and pleasantly surprised than an optimist and constantly disappointed. Followers of Motown’s meltdown—and the wider malaise affecting the entire auto industry—know it’s going to be a long time before the pleasant surprise part of the equation. Bloomberg reports, “Confidence among U.S. consumers plunged to a record low in February, signaling spending will slump further as unemployment soars. The Conference Board’s index declined more than forecast to 25 this month, the lowest level since data began in 1967, from a January reading of 37.4, the New York-based research group said today.” Lest we forget, the housing bubble begat the auto bubble which begat the collapse which lit up the turbos on Detroit’s decline, as it powered unthinkingly on its Thelma and Louise trajectory. So how’s that housing thing going? Do you really want to know?

Home prices in 20 metropolitan areas fell 18.5 percent in December from a year earlier, the biggest drop since records began in 2001, according to S&P/Case-Shiller. All the regions were down during the period, led by a 34 percent slump in Phoenix and a 33 percent slide in Las Vegas.

Tomorrow, GM and Chrysler will face a presidential task force on autos, trying to pretend that their 10M annual selling rate is their “worst case scenario.” Sorry guys, you ain’t seen nothing yet. Literally.

Meanwhile, residuals values are dropping faster than pants in a porn movie. The dead cat bounce: sales of hugely discounted pre-owned cars are jumping. Dealer’s Edge reports that sales of certified pre-owned (CPO) luxury cars are jumping (relatively speaking).

Toyota’s Lexus brand says its dealers sold 4,348 “certified pre-owned” Lexus vehicles in January, a new January record for the category. Certified pre-owned Lexus sales rose 19.5% in January 2009 compared to a year earlier, even as demand for new Lexus vehicles in January fell.

Mercedes-Benz says its certified pre-owned sales rose nearly 27% in 2008 compared to the year before, and January sales of certified pre-owned vehicles jumped 86% from a weak year-ago.

BMW dealers sold about 10,000 certified pre-owned vehicles in January, and about 12,000 new vehicles. BMW spurred interest in its certified pre-owned cars and sport utilities with a 0.9% financing offer.

One problem: why buy new? Why indeed. February sales number are less than a week away.