Auto Sales Rebound From Extremely Depressed Levels

Auto sales are up, but not as much as meets the eye. For example GM sales are reported up 21% but adjusted for the number of sales days, the figure is 16%. Please consider GM 21% U.S. Sales Gain Trails Estimates as Lineup Cut

General Motors Co. posted a 21 percent increase in March U.S. sales that trailed analysts’ estimates as a cutback in domestic brands damped the company’s gains in a strengthening auto market.

Deliveries rose to 188,546 from 156,380 a year earlier, GM said today. The Detroit-based automaker is finishing the disposal of half of its eight U.S. vehicle lines under a plan to return to profit after a government-backed bankruptcy.

The results showed GM’s challenge in trying to retain the top spot in the U.S. in a month when industry sales may have run at the fastest pace since 2009’s “cash for clunkers” rebates. Toyota Motor Corp.’s incentives to counter global recalls spurred rivals to match the offers.

The seasonally adjusted annual sales rate for cars and light trucks may have reached 12 million last month, the average of 8 analysts’ estimates compiled by Bloomberg. That would be a fifth straight gain from a year earlier. March 2009’s pace was 9.86 million.

The estimates for individual automakers are adjusted for the number of selling days in a month. March had 26 sales days, 1 more than a year earlier. Because of the extra day, adjusted sales will be about 4 percent lower than the actual figures.

On that basis, GM’s increase was 16 percent, compared with an average estimate of 25 percent, based on 6 analysts.

Industry sales matching analysts’ estimates would still underscore the market’s contraction in the recession. Annual U.S. deliveries averaged 16.8 million last decade through 2007. The 2008 total was 13.2 million, and 2009’s tally of 10.4 million was the fewest in 27 years, according to industry researcher Autodata Corp. of Woodcliff Lake, New Jersey.

2009 Totals were the worst in 27 years and that does not even factor in population growth. Thus, beating 2009 numbers is not much to crow about. 2008 was not a good year to say the least, and I doubt we get to that level.

After such depressed levels, we are seeing a return of some pent-up demand, but this is a cyclical bounce not a secular one.

Next year the comparisons will not be as easy to beat. Likewise they will not be as challenging as 2006-2007.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
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Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
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