Poor auto sales not helping fuel the economyDate posted: 5/24/14 05:45:00 AM
The automobile industry provided a solid boost to the nation's economy in 2013, but car sales seem to be stuck in neutral through the first quarter of 2014.
Total new-auto sales in February failed to hit their expected total. The final figures showed the industry sold a little more than 1.19 million cars, with the biggest eight automakers accounting for 1.06 million of those sales. Many forecasters saw sales totals reaching higher than 1.2 million in February, according to International Business Times.
The slow totals in February, which many people pointed to frigid weather and icy conditions as major detractors to the total, bring down the seasonally adjusted annualized rate to 15.3 million, a low end of the range of forecast estimate, according to the International Business Times.
"We're definitely seeing that there were some declines relative to where we expected to be in February," said Eric Lyman, vice president of editorial and consulting for automotive data provider ALG. "With the second month in a row with the polar vortex in play, we are seeing it as having an impact. Certainly other industries and the Fed are looking into the economic impact as a result of the poor weather. So [the weather] hypothesis seems to have gained more traction and legitimacy."
Dealers and automobile manufacturers are optimistic about the future. The general consensus is that the weather won't stay terrible forever, and a rush of people will come back into showrooms.
"If we get anywhere near normal temperatures, sales will explode," Wes Lutz, owner of Extreme Chrysler Dodge Jeep, told The Wall Street Journal. "All dealers have inventory, so you know the manufacturers will ramp up incentives. People are still ready to buy. It's just that they stay away if we're snowed in."
Cash-strapped homeowners hoping to buy a car should look into a home equity line of credit from their bank or financial institution. This type of credit is given to a borrower who puts his or her home down as collateral for the credit line, which is often used for car payments, home renovations or student loan repayment.
Standouts in the auto industry
Nissan and Chrysler were two manufacturers that managed to scale the rough February weather. Each company was able to get through the month with double-digit, year-over-year growth, according to the Business Times. Chrysler gained traction behind Jeep, which many consumers were attracted to because of its 4x4 capabilities and overall strength in snowy and icy conditions. Nissan, on the other hand, received some strong support from its customer base in warmer regions, according to Karl Brauer, senior analyst at automotive pricing and information provider Kelley Blue Book.
"Nissan saw strong growth in February, despite the continued cold weather that has plagued much of the U.S.," Brauer told the Business Times. "This is at least partially due to Nissan's strong customer base in the Southern and coastal regions."
Nissan's redesigned Altima sedan and new Rogue crossover sold well, along with a car from Nissan's luxury brand, the new Infiniti Q50.
Trying to get into gear
Volkswagen had the worst sales decline among the eight biggest manufacturers. The Business Times reported much of that has to do with a lack of new redesigns, specifically its sedan line and the Tiguan crossover.
The Wall Street Journal reported that Volkswagen's VW brand had a February sales drop of 13.8 percent to 27,112 cars. The problem for VW is that it doesn't offer much on the SUV market, which now make up about a third of the sector.
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