Auto Industry Is Bright Spot of Economy – Car Pro News

The housing market is still on shaky ground. Unemployment languished above 8 percent until September. The one flank of the U.S. economy that’s marching steadily back is the sector that once seemed the weakest: Automotive.
The auto industry in September reached an important milestone that few other sectors can claim. Carmakers sold cars and light trucks at an annualized rate of 14.9 million, taking into account seasonal adjustments, according to the Automotive News data center. That’s the best pace since March 2008, before the failure of Lehman Brothers Holdings Inc.
Consumers weary of driving 11-year-old vehicles with poor mileage are increasingly trading in their jalopies for new, fuel-efficient models. Small car sales climbed 50 percent last month as gasoline prices held above $3.75 a gallon. Even pickup sales, linked to the nascent housing industry, are up this year.
“Autos are the bright, shining star in the economy,” Mark Zandi, chief economist at Moody’s Analytics, said in a telephone interview. “It’s a key cog in the economic wheel. If we didn’t have the automotive recovery, the overall economic recovery would be much weaker.”
While U.S. auto sales are on pace to rise at least 10 percent for the third consecutive year, this isn’t as good as it gets, said Diane Swonk, chief economist with Mesirow Financial in Chicago. The car market will kick into higher gear once consumers see positive equity in their homes and the housing market starts humming again. The U.S. averaged 16.8 million annual deliveries from 2000 to 2007.
“The auto recovery is still not anywhere near what anyone would expect, given the number of new drivers and the level of pent-up demand,” Swonk said in a telephone interview. “But it’s a start and not all sectors have that. There will be a big difference when people’s largest asset — their home — is moving up in value.”
The U.S. sales rate exceeded the 14.5 million pace that was the average estimate of 16 analysts in Bloomberg’s survey. The rate is the best industry sales pace since 14.95 million in March 2008, according to the Automotive News data center.
The U.S. averaged a 14.5 million annualized sales rate in the third quarter, the fastest since the 15.3 million pace set in 2008’s first quarter, according to research firm Autodata Corp.
Confidence is growing among automakers, including those that required bankruptcies and bailouts in 2009 to survive.
“As we look forward, we continue to be encouraged,” Kurt McNeil, vice president of U.S. sales for General Motors Co., whose predecessor company went bankrupt in 2009, said on Tuesday.
GM shares closed Friday at $24.80, up 22 percent so far this year.


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