 | Agent009
"I sincerely thank you for the warning. Now I'm off to sharpen my pitchfork." |
| View My AgentSpace |
Print this Page |
Digg It |
del.icio.us
Analyst Group Sheds Light On Poor March Sales
In an effort to shed some more light as to why sales came in so low in March, CNW Research offered some analysis as to what is going on the marketplace.
According to the company, a slew of economic and industry conditions, including the credit fallout, declining closing ratios and slow showroom floor traffic, are among the many reasons it pointed to as why the bottom appeared to drop out for sales.
In its mid-month Retail Automotive Summary, CNW predicted a 9.9-percent drop in sales for March. However, by the end of the month, the actual decline in sales was reported at 12 percent.
Breaking it down further, CNW's Art Spinella discussed eight possible reasons for the escalation in struggles during the second half of March.
—Floor traffic declined by almost 30 percent, the biggest monthly fall since the early 1990s.
—Closing rates fell 20 percent. Essentially, even when people showed up at a dealership, they weren't buying.
—During the first quarter of the year, almost 25 percent of home equity lines of credit were reduced or suspended. This resulted from lower home price evaluations.
"California, Florida, much of the Midwest and parts of the Southeast were hit even harder. California, for example, saw 38 percent of such lines of credit suspended or reduced," Spinella explained.
"Since about 30 percent of all new-vehicle acquisitions are made with home equity loans in that state, the result was a drastic slam to the auto industry that relies heavily on it for 15 to 20 percent of national sales (depending on brand)," he continued.
—Pent-up demand rose to 60,000 from 49,7000. As Spinella noted, this means potential sales were lost.
—The top age group for new-vehicle sales (ages 45-55) represented only 41 percent of floor traffic, down from a normal average of 65 percent.
—Incentives were less likely to entice shoppers to make a purchase, even consumers "on the verge of making an acquisition."
—According to Spinella, confidence levels for domestic and import brands were roughly the same during March, the first time this has happened since 9-11. Usually, import brands have higher levels of confidence.
—Spinella pointed out 2008 began with 49 million potential new-vehicle intenders. By March, that number had been reduced to 47.5 million. What's more, the intender base was 51 million in 2006, further illustrating the decline.