Thursday, September 27, 2012

Car sales encouraging, but lessons still apply

Sacramento, California – Americans are buying cars again, and that’s a good sign after several years of the Great Recession Blues.

Santa Monica-based says things are slowing a bit, but it has forecast that about 15 million new cars will be sold in 2013.

Their take: “2013 will likely be the first year of non-double-digit sales growth since the recovery began in 2010,” says Lacey Plache, chief economist at “Economic uncertainty at home and spillover effects from slowing economies abroad will continue to slow the pace of American economic growth, including car sales. But many of the same positive factors in play now will continue to support car sales momentum in 2013.”

OK, that’s pretty good news, right?  Sure, it’s not 17 million new units like we were seeing before the recession bomb dropped.  But 15 million is definitely a good number, having come through the firestorm of Cash for Clunkers (remember that) and the cliff edge of American car company failures.

Bonus good news: Used cars continue to sell well on American soil.

It doesn’t take too much of a genius to figure this out: The economy is slowly improving in some parts of the country.  And if you live in, say, Houston, Texas, right now, you know that things are really a whole lot better than they were not that long ago.

People are getting a little more confident about borrowing.  My guess is that many are probably coming out of their shells now that the worst of the fiscal storm apparently has passed.  And let’s face it: Cars have to be replaced at some point.  That car you’ve been nursing along for eight, 10 or 12 years is giving up the ghost, and it’s time to face facts and buy a new one (or perhaps a recent-model used car), lest you end up throwing more dough into the money pit.

While I’m encouraged by all this – and feeling good about jobs in the American auto industry – I think the current state of affairs needs to be taken with a pinch of caution.  I think we learned some things in the recent financial meltdown.  Let’s hope the lessons stick.

For one, the old formula of buying a new car every two or three years is probably gone for good.  At least for most of us.  It makes little economic sense to keep pouring big money into a new ride that often.  It’s like playing the slots in a Vegas casino.  In the long run, you’re likely going to lose.

And Detroit seems to get that.  They’re making cars for the long-term and touting the right things, including good mileage.  Good, that’s a big deal.  A generation ago, only a handful of future-seeing execs were seeing the light.

Detroit also seems to have latched onto the good public relations that can be had by building up fuel mileage numbers in their automotive fleets.  Sure, it’s OK to have a big sport-utility vehicle or a road-burning sports car here and there.  Folks still want those.  But overall, Detroit seems to have its head around the idea that fuelish is not foolish – it’s good business in this particular, somewhat nervous era of American consumption.

Detroit gets this better than the tech industry, which is sticking to the model that you should dump all your technology every two years and spend thousands more on the latest, bestest, powerfullest thing.  I’m guessing that model will ultimately collapse when more Baby Boomers start retiring and counting their pennies.  And two-year-tech reboots are going to be a hard sell until more young people start entering the job market.

I could be wrong of course … but the auto industry seems to have learned how to play the game.

Time will tell.  Right now, gotta run out and see what’s new down at the car lots.

1 comment:

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