New car sales in the United States have rebounded significantly since the auto industry bailouts of 2009. New year-to-date (YTD) car sales data through September 2013 show that nearly 6 million units have been sold nationwide, an increase of 5.5 percent over the same YTD sales numbers twelve months earlier. Sales of light duty trucks — pickups, cross-over vehicles, minivans and Sports Utility Vehicles — are up nearly 11 percent through the same period over last year’s YTD figures.
The recovery of the auto industry in the U.S. stems from the auto bailout began under George W. Bush and refined under President Barack H. Obama. Since the infusion, the industry has grown at a rate twice as high as the country’s gross domestic product.
Types of Vehicles that are Selling YTD
Vehicle sales in the following categories are contributing to the robust results in the 2013 new vehicle sales figures: 1,616,356 light duty pickups have been sold YTD, up 14.1 percent, followed by midsize SUVs of which 591,286 have been sold through September 2013, up 13.7 percent; Crossover vehicles (i.e. Subaru Forester, Honda CR-V, etc.) sold 2,521,466 units, the second most of any vehicle sold YTD, up 12.9 percent; and, luxury car sales are up 12 percent YTD with 840,314 sold. Top selling U.S. models were the Ford F-150 (559,506 units sold YTD, up 20.7 percent), Chevrolet Silverado (360,775 units sold YTD, 21 percent over September 2012 YTD totals), Ford Escape of which 228,290 have been sold YTD (up 14.1 percent), and Ford Fusion (226,293 sold YTD, up 16.5 percent).
Economic News for U.S. Car Companies
Chrysler and General Motors were the initial beneficiaries of the government’s 2009 auto bailout largesse. The companies received $10.5 billion and $51 billion respectively from the U.S. government. All but $16 billion has been paid back as of October 2013, although the number is somewhat deceiving: the U.S. Treasury still holds an 18 percent stake in GM, which it is looking to sell at around $80 per share — GM is trading just under $36 per share currently — while Chrysler’s remaining debt was exchanged for stock. The government sold this stock at a $1.3 billion loss.
Car Sales as Compared to the Overall Economy
The demand for homes is a leading indicator of economic recovery and growth after a recession has occurred. A newfound sense of wealth, along with a positive economic outlook tends to lead consumers toward the purchase of homes with a garage in order to purchase a new car. When considered together, new home and car sales account for more than 50 percent of economic growth following an economic recession.
Economists do note caution with respect to car and housing sales following the most recent recession, however. New car sales, not homes, are fueling the post-recession economic growth (at a rate twice as high as GDP, as noted above). New car sales are not going to younger consumers but to buyers age 55 and older (who have a lower probability of repeat buying). This, coupled with the fact that younger consumers are not purchasing homes and tend to be on the outside of higher wage employment opportunities, indicates that older consumers are driving the economic recovery, and that a return to recessionary conditions is possible if young consumers do not soon replace old ones.
Byline
Marcus Bradshaw writes all about car dealerships, new cars, car repair & maintenance, software for car dealerships and other related topics.
Image credit goes to Michael Layefsky.