Auto Sales Continued Weakening Is A Big Concern

Posted by jbrumley on July 15, 2016 11:12 AM

New Auto Sales Trend Should Worry GM, Ford and Automaker Shareholders

In January of this year, the term "peak auto" began to circulate in earnest... a phrase to suggest 2015's incredible year for automobile sales was an as-good-as-it-gets situation. Going forward, we could only shrink the industry's top and bottom lines.

More than a few people scoffed at the idea, defending U.S. automobile makers like General Motors (GM) and Ford Motor (F). While 2015 was a big year to be sure, there was no reason the industry couldn't post a repeat performance if not top it. In the meantime though, the picture has turned more than a little alarming.

It's a premise that doesn't quite jibe with the recent message, or the recent numbers. Year-to-date, sales of light vehicles in the United States is at 8.64 million, versus sales of only 8.52 million at this point in the year of 2015. A closer look at the data though -- and ideally a visualization -- paints the complete picture.

The reality: The "peak" of peak auto was the result of a very strong second half of 2015, which actually followed a somewhat lackluster first half of 2015. Though the year-to-date numbers are better than 2015's, the month-to-month figures are deteriorating fast.

It takes a chart to see this rollover, so...

071116-car-truck-sales (1)While car sales have been measurably stumbling since the middle of last year, the uptrend in truck sales has also clearly tapered off over the course of the past few months. 

The combined picture doesn't look any better. In fact, it looks worse, Not only has the annualized pace of automobile sales been inching lower since November of last year.  In fact, the current streak of a deteriorating pace is the longest stretch of weakening numbers we've seen since late 2008... when the recession was in full swing.

071116-combined-auto-sales (1)

If things don't change, vector-wise, the second half of 2016 could be trouble despite the seemingly strong comparisons for the first half of this year.

Perhaps most alarming of all is the fact that experts have mostly been overestimating how strong these numbers would be. Any optimism for the latter half of 2016 should be viewed with a skeptical eye, as auto sales haven't been living up to expectations.

 

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