The phrase, “As goes General Motors, so goes America,” can be traced back to testimony by Charles Wilson before a Senate committee in 1953. Wilson was then the president of General Motors and a nominee to serve as Secretary of Defense in the Eisenhower administration, a position he held for four years.
While GM and the entire auto industry are much different today than 60 years ago when Wilson made his comments, business is on the rebound.
The National Automobile Dealers Association expects more than 15.4 million new vehicles will be purchased or leased in 2013, an increase of about 1 million vehicles over the previous year.
“Pent up demand, affordable auto loans and enticing new vehicle designs add up to a solid sales year that will outperform the overall U.S. economy,” said Paul Taylor, chief economist at the NADA.
The New Car Dealers Association of San Diego County reports sales here were also on the rebound in 2012. New vehicle sales reached 123,680, the third consecutive annual increase and the first time sales have topped 100,000 since 2008.
“We are looking forward to further momentum in 2013 driven by our aggressive launch cadence, where approximately 70 percent of our vehicles will be all new or significantly refreshed,” said GM’s Marc Comeau.
Ford Motor Co. also reported a fast start to the year with sales in January up 22 percent compared to the same period a year ago.
A new report from Standard & Poor’s says there is plenty of good news and a few dark clouds hovering over the U.S. auto sales recovery.
“In our view, a key factor fueling the growth in auto sales has been the consumer’s increasing need to replace their aging cars and trucks, which are now a record nearly 11 years old, on average. As a result, we expect sales to increase for the fourth consecutive year from the 2009 lows,” cites the report written by analysts Robert Schulz and Nishit Madlani.
They also note the somewhat limited supply of used vehicles could help support the demand for new cars and trucks.
Of concern, however, is the current hike in gasoline prices and the impact on the overall economy.
“A modest hike in gasoline prices — currently roughly flat compared to early January 2012 — over the next 12 months wouldn’t necessarily curtail industry growth from our 2013 expectations. However, sustained increased prices at the pump, which we don’t expect in our base case over the next 12 months, very likely would take a bite out of new truck demand and could cause customers to replace older, larger trucks and SUVs with more fuel efficient vehicles,” say the analysts.
Although still a small fraction of overall sales, hybrid and electric vehicles have seen increased sales here in San Diego County with purchases rising by 9 percent in the fourth quarter of 2012.
To be sure, a decision to buy or lease a new car is a decision that can be influenced by real or perceived economic conditions.
“Automobile purchases continue to be a leading indicator of economic activity, and our survey reveals solid optimism for growth in 2012," said Marc Sheinbaum, CEO of Chase Auto Finance. "Buying or leasing a new car is an investment that individuals and companies make not only by necessity, but also when they feel good about the stability of their financial future. Sales are improving and dealers are investing in their businesses and hiring more people as they prepare for growth."