US Vehicle Sales Strong

One of the more telling statistics about the depth of the Global Financial Crisis is provided by the average age of American cars and trucks. The average American car is now ten years old and most truck owners are hanging onto their vehicles for 11 years. Traditionally, Americans took advantage of easy finance and relatively cheap new vehicles to replace cars and trucks more frequently, but needs must when the devil drives. Americans have had to tighten their belts and in doing so have discovered that cars and trucks now have more longevity than they imagined. However nice it might be to have a new set of wheels in the driveway, in these straightened times, it has been increasingly regarded as a luxury rather than a necessity. Consequently, the news that US car sales have just enjoyed their most buoyant month since the start of the Global Financial Crisis has been warmly welcomed.

Data released by the car manufacturers has shown the best monthly sales figures since 2007 with Japanese car manufacturer Toyota reporting a 14% rise, followed by Ford at 13%; Chrysler at 8% and General Motors (GM) at 6%. Of course, these figures flatter to deceive somewhat as they are percentage changes from an already low base, but very welcome, none the less.

Sales have been strong at opposite ends of the market with small cars and full-size pick-up truck sales doing very well. Ford reported that truck sales were up by 20% whilst Chrysler saw a 23% rise. The better figures have been linked to an upturn in the US housing sector (construction) which has boosted the need for heavy utility vehicles. Industry figures remain Bullish about sales prospects through to the end of the year, despite jitters about the Federal Reserve’s plans to “taper” their stimulus measures. Some fear that withdrawal of the stimulus measures will lead to a rapid increase in the cost of borrowing (which only has one direction to go in!), but reassurances by Ben Bernanke would tend to call this into doubt. Any rises in interest rates are liable to be gradual and not to be implemented until the US recovery is much stronger.