It's Getting Difficult to Say 'Peak Auto' Hasn't Already Happened

In the world of psychology and psychiatry, the term 'willful blindness' refers to a person or group of people that ignore data or information -- as if it didn't exist -- because it doesn't confirm to their preconceived notions.... or wishes.

The idea applies within the world of trading too, and perhaps more so, in that money can make people do some truly amazing stuff. In the world of stocks and bonds, traders and investors turn a blind eye to information because (1) it forces them to acknowledge their assessment may have been wrong, and (2) it may ultimately lead that person to lock in a loss on a trade.

With that as the backdrop, the folks that think 'peak auto' can't happen or won't happen may want to take a good, long, hard look at the chart below. It's a plot of the United States' overall automobile sales pace (annualized), passenger car sales (also annualized), and light truck sales (yes, also annualized). April's pace of 16.88 million vehicles was not only down about 5% on a year-over-year basis, it marks the fourth month in a row auto sales have fallen. One or two months is a blip or a stroke of bad luck. Four months in a row though? That's a trend. The growth trend -- the streak of increases seen between 2009 and 2016 - has been undeniably, visually broken.

It's not just waning automobile sales (in terms of units) that paints a less than rosy picture here either. Automakers are increasingly desperate to get a deal done, so much so they're sacrificing margins to sell cars. Buyers incentives on automobiles last month averaged 11% of a vehicle's transaction price, rolling in at $3903 per car. A year ago that number was just a hair above $3,000, and has been steadily rising.

Inventory levels are also high and/or rising. General Motors (GM) reported its got 100 days worth of inventory sitting on its dealers' lots right now, versus only 70 days worth of inventory in April of 2016. Ford (F) is faring slightly better on that front, with only 80 days of inventory on its lots. That's still alarmingly high by historical standards though.

Even truck sales, which had been keeping the entire industry propped up, are starting to teeter.

You may want to wish car sales were still growing at their brisk pace, which meant sales of 17.5 million units in the United States last year. Something's clearly changed for the worst when you look at the chart of car sales going back to 2006 though. There's no amount of willful blindness that can suggest the chart above is telling you any other story.