JESSE SNYDER

Beneath the cliff, speak softly and walk away

Automotive News | December 3, 2012 - 12:01 am EST

We finally got a blowout sales month.

But is November a harbinger of a boom year ahead? Or a last flurry of giddiness before yet another economic disappointment?

The month just ended had all the elements of a sales takeoff point. Strong demand. Rising transaction prices. Incentives still in check. The first seasonally adjusted annual selling rate above 15 million since 2008. And at 15.6 million, a surprise SAAR substantially higher than anyone dared forecast even last week.

So here’s another chance to kick this steady-but-seemingly-plodding pace of recovery into a higher gear.

And what’s on our doorstep? The so-called fiscal cliff. A Congressional exercise in brinksmanship. Another breakdown in the U.S. political system that affects the entire U.S. economy.

The current focus is on the Dec. 31 deadline to avoid a combined $600 billion in automatic tax increases and government spending starting Jan. 1.

The debt-ceiling Congressional fight of August 2011 gives us some guidance. Yes, it hurt auto sales. And this new fiscal cliff was the “solution” to defusing that crisis: delay the showdown a year-plus and create a doomsday scenario so terrible that both sides would surely, certainly be forced to agree on a better solution. Clever, huh?

Yet as noise increases and time decreases, we have to ask: How big a damper will the fiscal cliff be on U.S. new-vehicle sales?

Boil it down, there are two camps: a lot or a little.

One says the fate of the U.S. economy, and ultimately the global economy, is at real risk. And failure to reach a settlement this month blows up the recovery, and auto sales.

The other says it’s a downer now and a bit bigger downer if it drags into January and February, but not a big deal until March or so.

I can make an argument for either side. But really, the answer is: We don’t know.

We don’t know how car buyers will react to a deal or a failure to settle. How U.S. and international financial markets will react. Or lenders. Or manufacturers.

Maybe it’s little deal. Maybe it’s a big deal. Must we find out the hard way?

It’s like being in a long convoy of survivors working its way through the last snow-covered mountain pass, before the green plains beyond, while two nitwits argue over how much noise would trigger an avalanche.

Guys, wait until the rest of us clear the pass. Then shout all you want. Heck, shoot into the overhang if you must. Pretty soon, you’ll know one way or the other.

Jesse Snyder is senior writer for Automotive NewsJesse Snyder is senior writer for Automotive News

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