) -- January may have been positive for
, but overall, the month's industry sales figures presented a bleak view of the economy.
Total industry sales totaled about 700,000 units, just 6% over sales of 658,603 units in January, 2009, the lowest month of the recession. Even worse, retail sales, a better measure of consumer sentiment, were down about 8% from the January 2009 levels. Ford and GM both benefited from higher fleet sales.
A wide variety of factors contributed to the poor sales performance, including the Dec. 31 expiration of a new car sales tax deduction, bad winter weather in various parts of the country, the stock market's uneven performance and the
recall. While Toyota's problems may benefit other manufacturers in the long term, they seem to hurt everyone in the short term, due to the high level of confusion they created.
Nevertheless, the sales numbers clearly indicate that "consumer demand has not been fully repaired," said Jesse Toprak, auto industry analyst at TrueCar.com. "The worst may be over, but we're not going to go through a steady recovery. We will hit these speed bumps on the way."
Toprak said auto sales tend to correlate directly with stock market performance. In January, the
Standard & Poor's 500
opened at 1,117, rose 3% to a high of 1,150 on Jan. 19 before retreating to end the month at 1074, down 4% -- a bad sign for the full year, if January is used as an indicator. Shortly after midday, the index stood at 1,072.
Auto sales were reported Tuesday, the same day that
The overnight package company is considered an important indicator because 6% of the U.S. GDP and 2% of the world's GDP is in its system at any given moment.
UPS offered "aggressive" earnings guidance for the full year, but with a slow January, as CFO Kurt Kuehn explained that "momentum may slow a bit" after a surprisingly strong December. Auto industry sales followed a similar pattern: the December sales total was the year's second best.
January "wasn't all that great a month," said Ford analyst George Pipas. "It all goes back to the fact that for many consumers, it may not feel as if we're out of the recession. Consumers have ongoing concerns about how much their homes are worth, about the employment outlook and about their income. So it's still a fragile situation, even though from a technical standpoint the recovery is underway."
January should not be considered an indicator of anything in the auto business, Pipas said. "January is the worst month of the year to draw conclusions from" because it is typically such a poor sales month, he said, and the Toyota recall further clouded the picture, in part because dealers for other manufacturers had difficulty determining the values of used Toyotas offered as trade-ins.
Meanwhile, December buyers were motivated by intensive automobile marketing and expiration of the sales tax deduction, part of the Obama administration's effort to stimulate sales during 2009. "If you were thinking about buying a car in early 2010, you might have bought in December," Pipas said. Programs like the sales tax deduction "can really swing numbers," he said.
Wells Fargo economist Mark Vitner said the slow January sales directly reflect what is happening in the economy. "It's a low number, but it's above where we were last year," he said. "It's exactly what should be expected, with the economy growing very modestly." No doubt auto sales provide one more indication that fourth- quarter GDP growth of 5.7% is unsustainable.
Said Vitner: "It's clear to a lot of people that the GDP number will slide back to 2%."
-- Written by Ted Reed in Charlotte, N.C.