US car and light vehicle sales probably reached a 28-year low in August, their worst level since the same month in 1982. The data for the projections is from Ward’s, a leader in car industry research, and data gathered by Bloomberg. If the forecast is right, the rate of sale could be below 2008, the year that nearly destroyed the auto industry and drove GM and Chrysler into bankruptcy.
Nothing the car companies have been able to do, including offering large amounts of incentives, has been able to arrest the slide.
The news is yet another piece of the picture of an economy headed into a second recession. It joins bleak data about jobs, housing, consumer confidence, and manufacturing.
Car sales are usually an excellent gauge of consumer purchasing activity. US production has run between 16 million in 2005 to less than 11 million in 2008. The level is a proxy for both manufacturing employment levels and the willingness of customers to take on a relatively large cost to replace older cars with new ones. It could be argued that new models have attracted a surge in buyers at during the first half of the year. Those models are no less attractive. More and more people can not afford them.
August sales will also be measured against the “cash for clunkers” program during August and September of last year. The project was a success which begs the issue of why the federal government does not repeat it.
But, a huge government incentive program may not bring buyers back into the market in great numbers. In the fall of 2009 consumers believed that they saw the light at the end of the long recession’s tunnel. Now, those same consumers are looking at another tunnel and they cannot figure how long or deep it may be.
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