January Auto Sales; Not Bad, For January – Forbes

Posted: Saturday, February 01, 2014

January auto sales are predicted to be just over 1 million cars and trucks, getting 2014 off to a decent start, according to forecasters.

“We believe that replacement demand, attractive products and strong consumer credit will continue to support sales as we return to the normal selling rate of 16 million units,” said Mike Jackson, chairman and CEO of AutoNation Inc., in a conference call on Thursday, Jan. 30.

For the year, that would be a modest increase in the range of 3 to 5 percent from 2013, according to AutoNation. Based in Fort Lauderdale, Fla., AutoNation is the country’s largest auto retail group.

Automakers are expected to report January sales on Monday, Feb. 3.

For the industry, U.S. auto sales in 2013 were 15.6 million, according to AutoData Corp., Woodcliff Lake, N.J. That was an increase of about 8 percent from 2012. Therefore, forecasts for 2014 imply slower growth.

It’s hard to draw too many conclusions from January sales alone. January and February are usually the most anemic months for car sales.

Chrysler's Toledo (Ohio) Assembly Complex; company photo

Chrysler’s Toledo (Ohio) Assembly Complex; company photo

That’s because of the weather, obviously, and also because it’s a long way from the traditional model-year changeover in the late summer and early fall. During the model-year changeover, the car companies offer the best deals of the year on the old models to clear them out of inventory, and consumers are more interested in the new ones.

A lot of educated guesswork goes into forecasting sales for the whole year based on just one month’s worth of sales.

The often-quoted SAAR – short for Seasonally Adjusted Annual Rate – is exactly that, an estimate for the full year based on one month’s worth of sales. Because auto sales vary so much seasonally, you can’t take any one month and multiply by 12 to predict a year’s worth of sales.

For instance forecasters for Edmunds.com estimate January sales at just over 1 million. Their January estimate times 12 would be around 12.4 million for all of 2014. Yet Edmunds.com estimates the January SAAR at 15.6 million.

That’s another way of saying January sales were pretty good – for January, which is usually a lousy month.

A lot of educated guesswork goes into forecasting sales for the whole year based on just one month’s worth of sales.

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