Playing ‘Pros & Cons’
I have mixed feelings about April’s sales results.
Yes, volume rose 8 percent and put us on pace to reach 16 million units this year.
But no, it didn’t blow the doors off.
April is kinda like a Jimmy Fallon “Pros and Cons” bit on "The Tonight Show".
Pro: The monthly selling pace topped 16 million a second straight month, the first time that’s happened since 2007.
Con: April’s SAAR fell to 16.1 million from March’s 16.4 million.
Pro: April sales rose despite weak fleet volume.
Con: But automakers had to juice spiffs 9 percent to do that.
Pro: We’re on the way to a fifth straight year of rising sales.
Con: But the growth rate is way below the rate of the first four years of the recovery.
Pro: We’re heading back to a 16 million year.
Con: But we’re still a number well below the 1999-2007 streak of 16 million-plus.
I could go on, but instead let’s look at what the industry must do in the next eight months to match the 16,154,010 light vehicles sold in 2007. Yeah, yeah, we’re a healthier industry than in those bad old days. Nobody wants to go back.
But 2007 is still a low target, the worst number of the string and way, way below the U.S. industry peak of 17,395,142 in 2000.
Through April, sales this year are up 154,113 vehicles or 3.09 percent higher.
To match 2007 volume, we need to add 571,873 to the 2013 total or 3.67 percent.
We’re running behind that pace. Not by a lot. One third of the year gone, we’re at 26.95 percent of goal.
And the rest of the year isn’t likely to have the extreme weather that January and February produced, improving our chances.
Larry Dominique, executive vice president of TrueCar.com, is sticking with his company’s sales forecast of 16.3 million for the full year (an increase of 4.61 percent). But April’s results didn’t thrill him either.
“To get there, we’re going to need a few months with a 16.4 or 16.5 million” selling rate, he said today.
Does any of this really matter?
Not matching 2007 sales wouldn’t be the end of the world. But sales growth is definitely slowing, not just from the double-digit rates in 2010, 2011 and 2012, but also from 2013’s 8 percent. Hitting 16.2 million or more this year would give the industry some momentum into 2015 -- and at least a shot at a sixth year of growth.
Or are we eager for this sales recovery to nose over the peak and start sliding down the back side of the business cycle?
You can reach Jesse Snyder at email@example.com.