Sales of new motor vehicles decline to 14.9 million units at an annualized rate in February after a small upward revision to 15.9 million units in January. This is close to the consensus of 15.0 million units in an Econoday survey. The decrease is no surprise as forecasters anticipated that the jump higher from 13.4 million units in December 2022 would not be sustained. However, this is a healthy pace of sales following short supplies of new motor vehicles in 2022 which have now been alleviated. Sales of North American produced motor vehicles are down to 11.8 million units in February after 12.5 million in January. The total for foreign-made motor vehicles is 3.1 million units after 3.4 million in the prior month.

Consumers continue to overwhelmingly prefer vehicles in the light trucks category which includes minivans, SUVs, and crossovers. Light truck sales are down to 11.933 million units in February from 12.671 million units in January and account for 80 percent of total sales. Passenger car sales are down to 2.953 million units in February after 3.205 million units in January. In the past, higher prices for gasoline would send some buyers to more fuel efficient passenger cars, but that no longer seems to be the case. It is possible that improved mileage and the availability of hybrids is having an impact on consumer choices.

Heavy truck sales are down to 450,000 in February after topping the 500,000-mark in the prior the prior three months. It appears that businesses made an effort to buy this type of equipment before financing costs moved higher.

After swinging sharply higher in January to a 15.7 million annualized rate, unit vehicle sales in February are expected to slow to 15.0 million.

Unit sales of motor vehicles, published by the Bureau of Economic Analysis at the beginning of each month, include domestic sales and imports. Domestics are sales of autos produced in the U.S., Canada, and Mexico. Imports are U.S. sales of vehicles produced elsewhere. The data track all passenger cars and light trucks up to 14,000 pounds gross weight (including minivans and sport utility vehicles). Though totals include a relatively small portion sold to businesses, motor vehicle sales are good indicators of trends in consumer spending and often are considered a leading indicator at business cycle turning points.

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 during the 2001 recession but then, boosted by a low interest rate environment, rose sharply through 2007 before falling sharply during the Great Recession. Sales then recovered and, once again boosted by low rates, began a long period of steady and favorable growth.

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.