U.S. Car Sales Have Spring in their Step
The U.S. auto industry badly needs a decent spring selling season this year - and it just might get it, thanks in part to big incentives at Toyota (TM) and General Motors.
The spring selling season is a bit of a throwback. The traditional idea was that spring weather made visiting dealerships more inviting. That was more important before the Internet, when everyone did their car shopping in person.
U.S. auto sales still tend to pick up in the spring, but only in relation to the slowest months, January and February. The highest sales of the year typically occur in the late summer or early fall, and again in December, because that is when the biggest discounts usually are available.
Toyota is upsetting the seasonal routine this year with big incentives aimed at getting people past the unintended acceleration debacle. General Motors is also offering deals to arrest a sales slide, and specifically to steal Toyota customers. On top of other deals, GM is offering Toyota owners a $1,000 rebate or zero-percent financing to defect.
The deals helped get March auto sales off to fast start by recent standards, according to online shopping data from Edmunds.com.
Edmunds.com estimated that the Seasonally Adjusted Annual Rate for new cars was about 12.5 million for the first week of March. If that were sustained, it would be the highest for a full month since August 2009 during the Cash for Clunkers government rebate program. However, Edmunds.com expects a lower SAAR for the full month of March of about 11 million.
That would still be an improvement over January and February 2010, and better than nearly all of 2009.
"Generous incentives from General Motors and Toyota have stimulated this boom," said Edmunds.com Senior Analyst Ray Zhou.
It's also tax return season. Some buyers undoubtedly put their tax returns towards a new car, but tax returns seem to be a bigger factor on the used-car side. Some companies, such as J.D. Byrider, which franchises "buy-here, pay-here" used-car lots, will even extend credit towards tax returns yet-to-come. These are high-interest, subprime loans, but J.D. Byrider argues that without them, many customers couldn't get a loan at all. Let the buyer beware.
Photo: J.D. Byrider