March Light Vehicle Sales: Still Subdued

April 5, 2012 – Among the data released this week, U.S. car and light truck sales fell by 0.7M units in March to a 14.3M unit seasonally-adjusted annual rate (Chart 1).

Chart 1. U.S. Light Vehicle Sales. Millions. Seasonally-adjusted annual rates. Monthly and 3-month moving average. January 2007 through March 2012.

Despite March’s setback, these light vehicle sales have continued to show a positive three-month trend since the temporary slump seen from May through August last year.

Viewed on a quarterly basis, light vehicle sales averaged a 14.5M unit seasonally-adjusted annual rate for the three months of Q1. That’s 1.1M units more than their Q4 average – a very strong gain. This followed another exceptionally strong gain of 1M units in Q4. To put these figures into context, the average increase in light vehicle sales between Q2 2009 (the trough of the last recession) and Q3 last year was only 0.3M units per quarter.

Some of the recent surge in these seasonally-adjusted light vehicle sales may have been driven by temporary seasonal effects. In particular, the remarkably mild winter weather may have enticed some vehicle buyers to do their shopping earlier than usual this year, thereby “pulling ahead” some of the sales that would have normally occurred in the spring and/or summer months. This “pull ahead” logic suggests, in turn, that we might be due for some seasonally-atypical slowing in light vehicle sales in coming months.

In the meantime, even after their sharp run higher in Q4 and Q1, light vehicle sales levels remain subdued by historical standards (Chart 2).

Chart 2. U.S. Light Vehicle Sales. Millions. Seasonally-adjusted annual rates. Quarterly. Q1 1968 through Q1 2012.

Yes, those 14.5M Q1 light vehicle sales did mark a four-year high – the strongest since the 15.3M units sold in Q1 2008. But, the economy was in a recession in Q1 2008. Recent sales levels still remain well below the 16M – 18M range that prevailed throughout the last expansion.

In the data before the last recession, we have to go all of the way back to the mid-1990’s to find light vehicle sales levels as weak as they were in Q1.

Suzanne Rizzo