Did bad weather take its toll on January car sales?
Winter’s chill may have put new car sales in the deep freeze, warns J.D. Power and Associates. The California-based consulting firm says that after an unusually brisk few weeks, the latter half of January saw a sharp loss of momentum in new car sales.
Industry bean-counters will shortly begin reporting on the first month of 2011 – if they can get to work considering what forecasters are already declaring the “historic” blizzard taking aim at much of the country. Serious winter storms have been slamming much of the country, in recent weeks, burying the East Coast under a blanket of snow and soaking much of the West Coast with devastating downpours.
Such storms can quickly short-circuit the new car market in a month that is already one of the weakest of the year for the auto industry. Consumers, opening up those credit card bills from the holidays often put off major purchases, like automobiles, until spring.
Going into January, however, many analysts found that shoppers were maintaining their December buying frenzy, which translated into the best month of 2010 for the auto industry.
But, “The strength in retail sales from the beginning of the month has reversed, during the past two weeks, slowing the momentum,” contends Power’s executive director of global forecasting, Jeff Schuster.
Give much of the blame to bad weather, but other factors appear to be contributing to the slowdown, according to Power, which tracks data reported by thousands of U.S. car dealers. There are signs of “payback” from December, some customers having moved up their car buying, which means less motorists going to showrooms this month.
And Power suggests that the industry could bring a slump on itself, many makers having trimmed back on their incentive programs.
But those rebates and other giveback programs are still up from January 2010, counters Jessica Caldwell, senior analyst with Edmunds.com.
Nonetheless, Edmunds expects retail sales for January 2011 to come in at just 661,000, compared to 947,000 for December. Adjusted to reflect the normal ebb-and-flow of the seasons, that works out to an annualized sales rate of 10.2 million. And when you add in fleet sales, the Seasonally Adjusted Annual Sales Rate, or SAAR in industry-speak, is actually going to come in slightly ahead of December, Caldwell contends, at 12.57 million, compared to 12.48 million the month before.
It’s all in your perspective. Total January sales, including fleet and retail, will be up 17.3% over the year ago numbers – but down 28.4% from December, Edmunds predicts.
“January is typically the worst sales month of the calendar year,” she says, “so this is an impressive jumping off point for 2011.”