|Total Vehicle Sales||18.1M||17.6M to 18.3M||18.2M||18.2M|
|Domestic Vehicle Sales||14.4M||14.5M|
Consumers have really shown their strength the last three months, buying vehicles at a 12-year high annualized rate of 18.2 million. That's right, for three months in a row. The results, however, do not point to a monthly gain for the motor vehicle component of the November retail sales report -- but they do point to a foundation of strength.
The composition of November's unit sales shows a shift higher for light truck sales, no doubt the result of low gasoline prices, that offsets a shift lower for cars. Low gas prices are keeping more money in consumer pockets, reflected not only in a rising savings rate but also in exceptionally strong vehicle sales.
Market Consensus Before Announcement
Vehicle sales have been one of the best highlights of the 2015 economy, reflecting consumer health and giving a boost to retail sales as well as helping the factory sector to offset weakness in exports. Sales levels are at 12-year highs making further gains, however, difficult with the Econoday consensus calling for an 18.1 million annualized rate in November, just shy of the 18.2 rates of the prior two months.
Unit sales of motor vehicles include domestic sales and foreign sales, otherwise referred to as imports. Domestics are sales of autos produced in the U.S., Canada, and Mexico. Imports are U.S. sales of vehicles produced elsewhere. These are for light vehicles which include all passenger cars and light trucks up to 14,000 pounds gross weight (including minivans and sport utility vehicles). Individual manufacturers usually report sales on the first business day of the month. One of the first tabulators of the data is Autodata Corporation. Motor vehicle sales are good indicators of trends in consumer spending and often are considered a leading indicator at business cycle turning points. One should note that manufacturers do not break out vehicle sales to businesses, which are a smaller but still significant percentage of the monthly total.
Since motor vehicle sales are an important element of consumer spending, market players watch this closely to get a handle on the direction of the economy. The pattern of consumption spending is one of the foremost influences on stock and bond markets. Strong economic growth translates to healthy corporate profits and higher stock prices. The bond market focus is on whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth. This balance was achieved through much of the nineties. For this reason alone, investors in the stock and bond markets enjoyed huge gains during the bull market of the 1990s.
Retail sales growth did slow down in tandem with the equity market in 2000 and with the 2001 recession. A low interest rate environment through 2006 supported motor vehicle sales. But the credit crunch and recession led to a sharp drop in sales in 2008.
In a more specific sense, auto and truck sales show market conditions for auto makers and the slew of auto-related companies. These figures can influence particular stock prices and provide insight to investment opportunities in this industry. Given that most consumers borrow money to buy cars or trucks, sales also reflect confidence in current and future economic conditions.