The outlook for 2001 sales is still pretty strong, despite four consecutive months of falling sales.
Dealers at the NADA convention were concerned about sales, but not convinced, for the most part, that a severe or prolonged downturn has begun.
'Everybody's talking recession, recession, recession, but honestly, we haven't seen it in our business,' said Rick DeSilva, who owns Liberty Subaru in Oradell, N.J.
Dealers interviewed at the convention cited interest rate reductions and the prospect of a Bush tax cut as reasons for optimism. The Federal Reserve cut short-term interest rates twice in January for a total of one full percentage point, and analysts expect more cuts this year.
'There is still a great deal of spending power in American households,' Paul Taylor, NADA's chief economist, told reporters.
NADA expects sales of about 16.3 million light vehicles in 2001, which is higher than some Wall Street predictions. Any number above 16 million would make 2001 the third-best year ever. Sales in 2000 were a record 17.4 million.
Taylor said the first quarter will be sluggish, however. Reasons for pessimism include the fourth-quarter falloff in sales, bloated inventories and the pressure on automakers to cut incentive spending.
Early figures for inventories as of Feb. 1 were 'through the roof,' especially for General Motors and Ford Motor Co., said John Casesa, auto analyst for Merrill Lynch & Co. in New York. He said in a report that GM and Ford may have to cut light-truck production further to get inventories in line with demand.
January sales results didn't provide a solid case for optimism or pessimism. 'January is traditionally such a squirrelly month - it's not a good month on which to base a trend,' said Steve Girsky, auto industry analyst for Morgan Stanley Dean Witter, at a meeting sponsored by J. D. Power and Associates in Las Vegas on Feb. 1.
January light-vehicle sales of 1.2 million were down - but by just 3 percent from a strong January 2000.
'The downward (sales) trend we saw in December really slowed in January,' said Mike Jackson, CEO of the nation's largest dealership group, AutoNation Inc. of Fort Lauderdale, Fla. Nevertheless, Jackson said, AutoNation expects industry sales to fall below 16 million this year.
This is a good time to hold back on ordering vehicles, but sales should pick up again by late summer, said Sid DeBoer, CEO of Lithia Motors Inc. of Medford, Ore. He said he expects government intervention to pump up the economy, but it takes time to feel the effect.
'You have to order cars ahead of time, say 120 days,' DeBoer said. 'You always have to be thinking ahead, not about what's going on right now.'