Forget fundamentals; pent-up demand gets tough

I don’t trust the fundamentals to drive auto sales as much as I used to. You know, those macroeconomic factors the auto industry used to obsess on.

For years, everybody from economists and forecasters to product planners and production schedulers closely watched every twitch of the data; especially the U.S. unemployment rate, housing starts and consumer confidence index.

Those three, plus more lately U.S. stock indexes, usually predict how many new vehicles consumers will buy. Everybody watches the macros because the system works.

But look at all the really crumby data and then October’s 13.3 million SAAR.


How do you get a selling rate up 4 million from the first half of 2009 with these numbers?

There’s a new macro in town. Call it pent-up demand if you wish, but this ain’t the old wispy, ephemeral pent-up demand we used to blow raspberries at. This isn’t cloud behavior. This is one-by-one behavior. And it’s starting to trump the economic fundamentals.

After three years of hard times, people are tougher. They’re tired of being scared about the future. They’re also starting to listen to their old heaps. One by one, they’re taking a critical look at their rides -- the average vehicle on the road now is 10.7 years old.

What’s driving auto sales?

A couple in Houston thinks: “This heap is going to quit someplace hot and dry.”

A husband in Minneapolis thinks: “Before spring, my wife’s old beater is going to strand her somewhere cold and dark.”

New parents in Boston wrestling a child seat into the back of a two-door think: “Minivan. Now.”

And thousands of dressed-for-work motorists waiting for tow trucks think: “I can’t drive this piece of junk one more day.”

Meet the new face of auto sales fundamentals.

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