Last updated Monday, February 6, 2012
Good, not great
We typically anticipate a strong market this time of year, and we are rarely disappointed. What isn't usually so clear, however, is when it will kick in, and we tend to forget that. This year there has been much talk about an anticipated shortage of vehicles and I think many of us may have expected the market to get off to a roaring start. If so, we may be a bit disappointed. The market has been alright, but does not yet qualify as great, and that is really what we are waiting and hoping for. And it may yet happen.
Only time, and retail activity, will tell. Most buyers are reluctant to just jump into the buying mode without some evidence that there is a reasonable amount of consumer interest, and appropriately take a wait and see attitude. That has been the case thus far this year in most markets, and translates into a relatively stable market in most segments that favors those vehicles that are in short supply or are exceptional in some way. Right now that means that good domestic cars and trucks are quite strong. Run of the mill imports are just alright and European and Asian luxury vehicles are weak unless there is something that makes a particular vehicle stand out from the rest. There is plenty of supply in those segments and demand is tepid at best. There is no shortage, for instance, of 2009 Lexus RX350s or Mercedes C-class. They are about as common as Accords or Camrys these days and the market for them reflects that.
Consumer Demand Will Drive Market
So our sense is that the market is waiting to see how consumers are feeling these days, and so far they have been reluctant suitors. Who would blame them? It is an election year (and a strange one at that), Europe is still a question mark, unemployment remains high, housing is still a major issue. There is evidence, however, that consumer confidence is on the rise and if there is one thing I am pretty sure about it is that American consumers can only restrain themselves for so long and that there is a lot of pent-up demand out there. I think I read recently that the average age of vehicles on the road is approaching 11 years. That is a testament to several things, among them the increased reliability and longevity of product out there and the real weakness of the economy over the past few years. There are bright spots, however, and indications that things may be changing for the better. It would not take much to push things over the edge, in a good way.
Our 'spies' tell us that this weekend showed the first real signs of consumer demand this year. That could mean that February becomes a breakout month and that the market we have been anticipating arrives with a flourish. We would not be at all surprised if that is the case.