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Smoke on Cars

Auto Market Weekly Summary


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Just as the federal government went back to work this week, most of the nation fell under the grip of a brutally cold polar vortex. January is often tough to judge economic trends due to weather, and this year is no exception. This year we also had to deal with the government shutdown impacting some parts of the country more than others and taking a toll on consumer confidence.

Looking ahead: More belated government data from December, more details on January new vehicle sales, and data on January used vehicle sales and prices. General Motors and Fiat Chrysler report Q4 and full-year 2018 earnings this week. Toyota posts its Q3 earnings as its fiscal year ends March 31. The Chicago auto show opens later this week. Cox Automotive representatives will be there for the product reveals and industry buzz.

Last week’s recap: Some macro trends are showing signs of possible improvement head. The job market remains very strong even with the shutdown adding to unemployment. January saw 304,000 jobs created. Wages are increasing at a consistent rate better than at any point since 2009.

Consumer confidence: While consumer confidence declined substantially in January, that decline doesn’t seem to be negatively impacting plans to purchase a vehicle. Even more interesting is a big jump in plans to purchase a home. Even the Realtors are encouraged about more home sales in the spring as a result of mortgage rates coming down by nearly a quarter of a percent in the last month. At the same time, the housing market has more inventory. The spring may indeed be better this year for home sales.

Auto loans: We are not seeing the same retreat in auto loan rates as in mortgages, which is likely a reflection of investors becoming more risk averse about auto loans. The frigid temps at month end combined with no improvement in rates kept prospective buyers at home at month end. Had it not been for a big increase in fleet sales into rental in January, the new vehicle SAAR could have been even lower than the 16.6 million estimate we have without all of the full details.

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