DETROIT -- ( TheStreet) -- The auto industry had its best September since 2007, a month when the stock market approached its all-time high.
In September 2007, the S&P 500 reached 1527; the following month it hit 1576, before starting a descent that took it to 667 in March 2009.
New-car sales in September totaled about 1.2 million, and the seasonally adjusted annual sales rate was 14.9 million, the highest since 2008. "This number certainly puts the wind in the sails of auto recovery," said Edmunds.com analyst Jessica Caldwell on a conference call with auto reporters. Auto sales have climbed 60% since 2009, she noted.
"The product replacement cycle is in full swing," said Michael Yoshikami, CEO and founder of Destination Wealth Management in Walnut Creek, Calif., in an interview. "Consumers have been waiting to upgrade cars, and now have incentives and historically low interest rates."The S&P 500 is a (measure) of investor sentiment, and being close to 2007 highs is an indication that investors are not only feeling better, as (Federal Reserve Chairman Ben) Bernanke has wanted, but also that they are operationalizing that and spending money on durable goods," Yoshikami said. "I am bullish on the auto cycle," he said. "I think this is going to continue, I think we have two years of pent-up demand for new vehicles, and you are going to see cars continue to sell." Meanwhile, the S&P 500 could gain another 5%, he added. Of course, investors in 2007 didn't have to worry about tailspin economies in Europe and in the European auto sector. The news from the recent Paris Auto Show was grim. In the area of good news, Peugeot-Citroen CEO Philippe Vann declared that "some of our competitors in Europe are losing even more money than us on every car they sell," according to The Detroit News. Peugeot-Citroen is expected to lose more than $1 billion in 2012. Ford (F) and GM (GM), which owns a 7% stake in the company, are also expected to lose $1 billion or more in Europe this year. Caldwell cited three factors to explain the U.S. auto-buying frenzy. An aging fleet is bolstering the need for new cars, credit is easily available and, Caldwell said, "New cars got people into showrooms."
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV