Sales Improve

Car Sales Bottom Out and Rebound

Car sales analysts are paid a lot of money to get the numbers right.  Massive investments ride on predictions of economists and mathematicians.  Production decisions must be made months in advance so that suppliers can have the parts and components ready at the assembly line.

To consider that vehicle sales would drop to about 9 million units at the end of 2008 and early 2009 would have been … insane / blasphemy / nuts / impossible.  However, the real world chronic to acute financial crisis has happened.  Simple math might look like 9M / 18M = 1/2 and that is the broad brush impact for manufacturers.  A 50% cut to the income side of the cash flow equation represents an economic crisis with massive amounts of red ink because the business model is constructed with a much more robust number of vehicles out the door.

How about some good news?  There are signs that we are at the bottom!  New car sales data for February 2009 indicate 687,000 sales which is down about 40% from 2008.  Doing the math would result in an annual sales rate of 9.1 million units, which is far worse than any projection or estimation.

Sales are up almost 15% from January which means that 32,000 more vehicles were sold last month.  Does this absolutely establish that the industry is off the bottom?  Time will tell is the correct response.  The not-so-correct response is that we are bumping the bottom, which indicates that we know where the bottom is and that we do not really want to go back there.

Is there a trend in these numbers?  We can certainly hope so.  Sales at this level are an economic disaster not only to the manufacturers but also to dealers and the entire economy.