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Automotive Industry

9-11-01: A dividing line - Opinion & Analysis - automobile sales

Automotive Industries, Oct, 2002 by Ray Windecker

September 11, 2001, was a watershed for many phases of our lives, including the functioning of the automotive industry A quick look at the 3-year, 2000 to 2002 time span shows an industry time line divided by a monstrous event. Combined car and truck sales in the early time span, January 2000 to September 2001, experienced the predictable slowing that follows record sales (see AI, April 2001).

The terrorist acts of September 2001 would have been another significant deterrent to consumer confidence and buying activity, but massive incentives plus low commercial borrowing rates that underwrote both the offering and acceptance of the incentives altered the process. Incentives in the post 09/11/01 time period have spawned some massive sales months, always followed by a degree of payback, thus resulting in a sharply saw-toothed but moderate downtrend.

If the early trend had not been interrupted, we would now most probably be experiencing more months around the 16 million mark, while watching for signs of recovery. Instead, with the incentives of the post-September time period pulling in sales, the 2002 year is trending towards 17 million cars and trucks, a decent year when compared to the record 17.8 million of 2000 and 17.5 million in 2001.

There is little doubt that the incentives have helped to smooth some of the boom and bust cycle. However, it appears that we are on short term pulling even more sales ahead, rather than paying back the boom years The massive incentives have brought us into uncharted waters and it remains to be seen if that is good or bad. Enough pull ahead to soften a sharp decline and spread payback out over additional months is probably better than boom and bust. But excessive pull ahead that deepens an existing payback debt is another matter. The only certainties in the available numbers are that both the pre- and post-09/11/01 trend are moderately downward. We have yet to see the turnabout corner.

Monthly Sales Rates Combined Cars & Trucks

Before 9/11

                     Legend
          Unit Sales  Trendline  High & Low
                                 Data Point

2000

Jan.         18.6
Feb.         19.1
Mar.         18.5
Apr.         18.4
May          17.4
June         17.3
July         17.6
Aug.         17.3
Sept.                               19.2
Oct.         16.9
Nov.         16.6
Dec.         17.6

2001

Jan.         16.6
Feb.         18.2
Mar.         17.4
Apr.         16.8
May          17.0
June         17.3
July                                16.5
Aug.                                16.5
Sept.                               16.5

Note: Table made from bar graph
After 9/11

Millions

                    Legend
          Unit Sales  Trendline  High & Low
                                 Data Point

2001

Oct.                                19.2
Nov.         18.0
Dec.         16.6

2002

Jan.         16.7
Feb.         17.0
Mar.         16.6
Apr.         17.9
May                                 16.0
June         16.6
July         18.4
Aug.         18.5

Source: American Auto Datum 2003

Note: Table made from bar graph

Automotive Industry

9-11-01: A dividing line - Opinion & Analysis - automobile sales

Automotive Industries, Oct, 2002 by Ray Windecker

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