April Auto Sales Were OK, If You Look at Them the Right Way
U.S. auto sales weren't bad in April, if you look at them in contrast to a year ago.
It's also encouraging from the industry's standpoint that Ford (F), Toyota (TM) and General Motors dialed back slightly on incentives without the bottom falling out of monthly auto sales.
Nevertheless, you read a lot of references to auto sales being down from March, even though that's not the most appropriate comparison. I've written several times now that the usual way to look at auto sales is versus the year-ago month. That's because U.S. auto sales are highly seasonal.
Auto sales usually peak in the late summer and early fall, with the model year changeover. Discounts on expiring models and the arrival of new models both generate traffic. There's typically another, smaller, sales peak in December, as the car companies try to hit calendar-year sales goals, or bragging rights for "best-selling" this or that.
The upshot is that, for instance, it doesn't signify much to say sales fell from December to January, because sales always fall from December to January. The sort of thing to watch for is if this year's December peak is higher or lower than last year's December peak.
That's what I mean when I say April auto sales weren't bad. By that year-ago standard, U.S. auto sales were up about 20 percent from the year-ago month. Year to date, sales after four months were up about 17 percent from the year-ago period, according to AutoData Corp.
However, April sales were down about 8 percent versus March. Some of the car companies started emphasizing month-ago as opposed to year-ago comparisons earlier in the present downturn. That's because they were in search of some positive spin, in the worst auto sales downturn since World War II, but I think it's a bad habit that seems to have stuck.
There's yet another way to look at auto sales, and that's the Seasonally Adjusted Annual Rate. The SAAR attempts to iron out seasonal differences, so you can estimate what sales would look like for a whole year, if they continued at the present pace.
According to AutoData, the April SAAR was about 11.2 million units. That was up from about 9.3 million in the year-ago month. To provide some more context for the April SAAR, the SAAR didn't exceed an anemic 10 million for the whole first half of 2009.
When it finally did pass 10 million, it was with the help of the government Cash for Clunkers rebate program. For people who follow auto sales closely, that produced a sharp sales spike. That needs to be kept in mind when making year-ago comparisons this coming summer. It pays to have a long memory when looking at auto sales.
Chart: AutoData, BNET Auto