The first two weeks of the month saw a sales plunge of 6% in the Atlantic coastal region where there is huge workforce serving the government. Consumers step back from making purchases when they sense economic uncertainty. Accordingly, sales remained weak for the 16 days of federal partial shutdown. It should be noted that demand remained weak only in those parts of the economy where there were job losses due to the close down program.
Both JD Power and LMC Automotive affirmed that it had a short term impact on auto sales. The industry saw a steep rise in the second half after the shutdown was over. That was a good time for the shutdown to end as consumers were growing panicky and losing confidence which is very evident from the first half numbers. JD Power observed that right after the shutdown, sales saw a jump of 7.7% in the third week. The shutdown did have an impact, but it wasn’t big enough to put a brake on the recovery of the sector.
Automakers have been encouraged by the rebound of the housing sector and energy sector, which in turn lifted the demand for pickups. As business is growing, owners are identifying the need of replacing their old vehicles with the latest ones. This gave a real boost to the Detroit Three. General Motors (GM), Ford (F), and Chryslers benefited the most out of this as pickup trucks are their strength. Additionally, pent-up demand also bolstered the sale of vehicles. The seasonally adjusted annualized rate is expected to be 15.5 million.
What to Expect from Whom
Out of all the giant automakers, Nissan (NSANY) is estimated to post the highest sales gain over last year comparable month which could be as high as 19%. The global lead automaker Toyota (TM), and Japanese rival Honda (HMC) are also expected to see solid gains during the month which could be around 15% and 13%, respectively. South Korean counterpart Hyundai is forecast to witness a modest rise of about 3.3%.
As far as domestic automakers are concerned, Edmunds says that Ford is expected to post a 16% sales gain over the same month last year, General Motors is forecast to experience a 10% sales rise, and Chrysler is estimated to record an 11% increase in sales.
The auto industry is set to post a solid year as the economic conditions are encouraging and demand remains decent. LMC has reduced its estimation of retail sales down to 12.8 million. However, it kept the total sales for the current year the same at 15.6 million units. Senior Vice President of LMC Jeff Schuster is pretty optimistic about the coming year as well. He predicts that 2014 would cross the 16 million units mark. However, there is a word of caution: The first quarter of 2014 could see consumer confidence dwindling a bit. It would be exciting to watch how the auto industry fairs in the last quarter of the year.