Buyers might only tapped the breaks in April when it came to shopping for a new car, but only for a second.
Economists surveyed by Bloomberg put the Seasonally Adjusted Annualized Rate at 16.2 million, putting sales growth at 10 percent compared to the same time last year. But poor weather throughout April and a dip in consumer confidence might keep that number down, analysts said, hinting at a lackluster performance after a strong March. In short, consuming might be weaker than most hope.
Automakers release their April sales numbers tomorrow.
“I’m not sure why we’re seeing the weakness,” said analyst John McElroy. “It’s just not as strong out there. You would expect April demands to be stronger than that.”
While anything above 16 million would be good – and up to economists’ expectations for the year – McElroy said sales could be hampered by the lowered consumer demand and climbing gas prices.
Consumer’s faith in buying dipped last month, from a six-year high in March, to 82.3. That could signal a drop in sales below expectations what economists expect. But one thing automakers have tried to do is increase incentives, or price breaks, to buyers to get them on the lots.
“There’s still a lot of levers the auto industry can pull to get buyers,” said Bloomberg senior analyst Kevin Tynan.
Warren Browne, an independent consultant, said incentives have been more important this year and will play a big role in what tomorrow’s numbers look like.
“You can’t ignore incentives,” he said. “More and more I see companies talking about the deals,” he said, meaning companies are trying to push sales in light of a lowered demand.
After brutal weather in January and February, buyers were eager to hit the lots. But after a surge in March, the demand could see a lull, analysts said.
“It’s typical to see a hangover month after a strong March,” Tynan said.
General Motors sales shouldn’t be harmed by continued inquiries into faulty ignition switches that killed a dozen people. Analysts said given the problematic cars are discontinued and persistent consumer interest, the company won’t suffer monumental sales decreases as in the past.
While this growth seems slow, analysts aren’t worried about auto sales suffering for the year as a whole. The Commerce Department announced today that the economy only grew 0.1 percent in the first quarter, but more activity is expected for the rest of the current quarter.