US auto buyers shift towards the New Normal

Chemical companies, Consumer demand, Economic growth, Oil markets

US autos May11.pngUS auto sales remained stable last month. As the chart shows (red line), they were just above the 1.1 million level. Until the Crisis began in 2008, this was the minimum level for monthly sales, but now it seems to have become more of a maximum.

Beneath the surface, some other significant changes are underway:

• As GM noted, “consumers are continuing to rethink their vehicle choice“. Sales of cars with greater fuel economy, coupled with some style, continued to lead the market.
• Buyers of pick-up trucks are also trading down as gasoline prices rise, with V6 engines being preferred to the traditional V8
• The average age of the auto fleet is now over 10 years, a record
• Japanese manufacturers faced production issues due to the earthquake/tsunami damage, and Toyota’s sales were actually lower than a year ago

The combination of a push towards compact autos, and fewer Japanese vehicles, meant companies could reduce incentives. These fell $250 from March to $2118. Even GM, still focused on volume after its Q4 IPO, reduced them by $300 to $3016.


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