U.S. auto sales clocked in about flat in November compared with a year ago — and in line with widespread expectations that the market will only gradually creep upward for at least the next year. But industry executives and analysts mostly chose to interpret the American auto market as a glass-half-full.
November sales were 746,544 vehicles compared with 743,605 in November 2008. On an absolute basis, that number of units represented a 0.4-percent year-to-year monthly sales increase — or call it flat. But taking into account the fact that the industry enjoyed two fewer “selling days” this year compared with last November, sales actually increased by 9.1 percent last month on an apples-to-apples basis.
“It could be worse,” said Edmunds.com Senior Analyst Jessica Caldwell. “The fact that sales are stabilizing and increasing bit by bit each month is good news.Second Straight Month of 10 Million SAAR
Giving the overall nod to optimistic shading were a couple important factors besides the sales numbers per se. First, the closely watched seasonally adjusted annual rate of sales inched upward to 10.89 million units compared with 10.8 million units in October and a pace of 10.37 million units in November 2008. November marked the second consecutive month the SAAR was above 10 million.
“The month was notable in that the industry succeeded the 2008 pace for only the second time this year — and more notable because it was the first time the industry exceeded last year’s pace” without the benefit of last summer’s federal Cash for Clunkers program that created a sales spike in July and August, said Robert Carter, group vice president of the Toyota division of Toyota Motor Sales U.S.A. “That’s a real good sign for the industry.”
Economy on the Mend
Second, commentators Tuesday interpreted the mixed economic tea leaves as positive on balance for the U.S. auto industry, fueling their collective conviction that a continued ever-so-gradual recovery is in the cards.
“There’s a modest economic recovery that is underway,” said Emily Kolinski Morris, Ford’s chief economist. “Slow but sure is the best way to describe consumer and business activity.”
Kolinski Morris and others cited favorable recent indicators including upticks in consumer income, spending, and confidence as well as some stabilization in the housing market, a weak dollar that encourages exports, the strengthening of U.S. corporate balance sheets, and a string of stronger monthly readings of activity by the American manufacturing sector.
Jobless Constrain Recovery
On the other side of the ledger looms one huge offsetting factor: the ever-increasing rate of U.S. unemployment, which continues to dampen any economic recovery as well as keep a lid on rosier expectations for the near future. “Jobs remain top of mind, holding spending in check,” Kolinski Morris said.
Other negative indicators are credit conditions that “are still tight as banks remain cautious,” according to Michael DiGiovanni, executive director of global industry analysis for General Motors.
But Caldwell dismissed concerns that joblessness and other stubborn weak spots in the economy could introduce a “double-dip” recession that some economists still fear.
“I don’t see that happening today,” she said. ” It looks like things are on their way to being steady.”
Caldwell and others cited a number of underlying reasons for coming down on the side of their optimistic interpretation of November results and portents for the future.
For one thing, she said, the spate of new and very recent products coming out of Ford and GM are being almost universally embraced by American consumers — suggesting that as the two strongest domestic automakers continue to introduce new and upgraded models, their prospects will continue to improve.
“It’s easy to take for granted that these products would do well and are selling,” Caldwell said. “They easily could not be doing well. They’ve been promising us better products for some time, made for the U.S. market, more evolutionary — and it looks like they’re doing that.”
Stable Gas Prices a Plus
Stable gasoline prices over the last year and a half, within the range of $2.50 to $3 a gallon, also have caused American consumers to take closer looks at segments such as pickup trucks and large sport-utility vehicles that got slammed by $4-a-gallon gasoline in the summer of 2008.
“People who need that type of vehicle now are getting more comfortable with the stabilization of oil prices,” said GM’s DiGiovanni. “We’re benefiting from a nice lull at the pump.” However, DiGiovanni also noted GM’s forecast for a long-term re-escalation of oil prices as global economies recover.