September Light Vehicle Sales: Marching to a Different Drummer

October 4, 2005 – Based on reports from the auto makers, U.S. car and light truck sales fell by about 0.5M units in September to an estimated 16.3M unit annual rate. This followed a much larger 3.9M unit August decline (Chart 1).

Chart 1: U.S. light vehicle sales, January 2000 through September 2005.

A new round of sales incentives (“employee discounts for everyone”) sent light vehicle sales soaring to a near-record 20.7M in July (Chart 2). Sales were widely expected to retrench after this unsustainable buying binge.

Chart 2: U.S. light vehicle sales, January 1968 through September 2005.

Despite the subsequent increase in gasoline prices, the collapse in consumer confidence and other disruptions caused by Hurricanes Katrina and Rita, the “payback” for those extra strong July sales seems to have been relatively small to date. Including the last two months’ declines, light vehicle sales averaged about 17.9M for Q3 as a whole – a gain of 0.7M compared to Q2, and their best quarterly showing since they reached 18.5M in Q4 2001 (Chart 3).

Chart 3: U.S. light vehicle sales, Q1 2000 through Q3 2005.

Bottom line: These data do not support the case for a consumer-led economic slowdown.

Suzanne Rizzo