Jesse Snyder
Jesse Snyder
Opinion Page Editor

How can 1% growth feel so good?

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June turned out to be a great month for U.S. auto sales. Ignore that goofy 1 percent increase in units sold. It’s a calendar fluke. The 17 million selling rate tells the tale.

And the story, for June and the first half, is a good one. First half sales rose 4 percent to 8.2 million, overcoming horrible January and February weather and putting the U.S. auto industry back on track to finish well above 16 million units for the year.

The numbers are modestly good. But the industry’s mood is more buoyant.

That’s partly because the first half was backloaded. Auto sales started in the deep freeze, literally, and built to a June seasonally adjusted annual rate of 17 million, the highest monthly SAAR since July 2006.

Most auto executives expect the second half’s selling pace to accelerate moderately. Toyota just raised its 2014 industry forecast a notch to 16.3 million, noting consumer confidence is at a six year high and consumer credit is widely available.

What other upbeat signs are in the wind? For starters, some other macroeconomic measures that are typically tied to car buying behavior.

The Dow Jones index has set several all-time records this quarter, as has the S&P 500 index. The Dow is still flirting with 17,000.

Companies are finally hiring. The housing market is growing.

In the auto industry, discipline is holding up. Inventories remain relatively lean and incentives are still moderate and targeted, both signs production is in line with demand.

And there are intangibles as well.

Both May and June sales finished with upside surprises.

Average transaction prices increase most months, another sign of healthy growth.

Sure, we’re well past the double-digit sales gains of the early recovery. But if the fifth straight year of a recovery starts off 4 percent higher, that creates some optimism that 2014 will end up with some momentum toward a sixth straight growth year in 2015.

It’s rare for auto sales to grow six consecutive years. The last time we achieved that? From 1921 to 1926.

You can reach Jesse Snyder at jsnyder@crain.com.

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