In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses vehicle sales in January.
- Autos and trucks are typically the second most expensive item purchased by consumers after a home. Therefore, it is worth monitoring whether consumers are opening their wallets for vehicles.
- From a recent cyclical peak of 16.4 million (annualized sales rate) in November, vehicle sales fell in two straight month. Sales were 15.4 and 15.2 million, respectively, in December and January. Some portion of the decline can be attributed to the nasty weather. Recall, existing home sales had also fallen much more than what could be explained by winter seasonal patterns. The softness in both home and vehicle sales could therefore imply a shift in consumers’ taste for big outlays.
- Broadly speaking though, the auto industry has been bouncing back. Car prices are being raised and helping the car producers’ bottom line (though at the expense of consumers). Also employment at GM, Ford, and Chrysler plants in Michigan and Ohio has been rising. Jobs are also getting boosted at foreign car companies based in the U.S., such as the BMW plant in South Carolina, Mercedes in Alabama, Nissan in Tennessee, and Kia in Georgia.
- Women need to be aware in negotiating. Nearly all research shows women paying more than men for the same car. Simply kicking the tires does not impart knowledge about the car. However, since women are better drivers than men, as determined by the probability of auto accidents, insurance premiums are lower for the fairer sex. Young adolescent males, who believe they can conquer the world while listening to loud decadent music, are shown to be the most accident-prone and hence the worst drivers.