What an ugly month.
August was never going to be a pretty baby. Not a good month to sell new cars.
We started with a lousy set of economic indicators. Pick your favorite: unemployment rate, personal income, housing starts, stock market. Lousy, lousy, really lousy, volatile.
Then August got worse.
Uncle Sam’s credit rating got dinged. Fresh speculation even more European economies could collapse. Consumer confidence tanked, back to levels not seen since the panic of early 2009. Honda and Toyota still short on stock. Then Hurricane Irene smacked the Atlantic Seaboard upside the head.
Somehow, the selling rate ended up at 12.1 million. (Hey, dealers, marketers, take a bow. I’m impressed.) It ain’t exactly 2006, but it beats 2009.
But the August beatdown hasn’t stopped yet. Let’s look ahead to the fall and 2012. Since the March Japan quake and gas price spike, we’ve seen a steady trickle of forecasters downgrading 2011, but largely staying upbeat on next year and beyond. Recovery delayed, so to speak.
But in August, forecasters stampeded for the doors. And not just on what’s left of this year, but for the first time, next year too. Lots of downgrades, but one stands out. IHS Automotive cut 1.2 million out of its 2012 forecast, to 13.5 million from 14.7 million.
Look, the macro-economics stink. Glance at those and it’s hard to disagree with anybody’s downgrade.
But I’m thinking another August event triggered the rush to downgrade.
Congress’ debt-ceiling debate debacle. Talk about ugly. No matter where you stand on the political spectrum, that spectacle left a nasty taste.
Economist style, we can trace public reaction to a deadlocked and dysfunctional government to the quick plunge in consumer confidence and the outlook.
But I see another, lingering drag on car sales. The auto industry has crept along for three years, selling only to rational buyers, plan-ahead types who weigh every factor before they buy. The market isn’t going to take off, to head toward the good-time boom days until the emotional buyers return.
Sure, they count their pennies too, especially these days. But they buy new cars because they want a thrill, because a shiny new ride makes them feel good.
And until they wash the bitter taste of August out of their mouths, they aren’t going to be in a buying mood.