Light Vehicle Sales Up Significantly in February 2012 – A Sign of Economic Growth

In the month of February 2012 light vehicle sales were up 14.1% year over year and up 6.9% month over month.  Early estimates were for 14 million in sales but the preliminary number is coming in much higher at 15.1 million.  Over the last several months light vehicle sales have increased drastically as can be seen on this chart.

Some feel as if light vehicle sales numbers can be used as an economic indicator but these numbers must be taken with a grain of salt.  While the economy has significantly improved since the “great recession” we are still seeing home prices at a post bubble low.  The good news is that light vehicle sales are at a level that we have not seen since the end of 2007 and beginning of 2008.  The month of February 2012 saw sales eclipse even the “cash for clunkers” month back in the summer of 2009.

The bad news is that 11.1 million United States properties had negative equity in the fourth quarter.  By crunching this data it looks as if Americans are still seeing property and home prices stabilize but they have a positive outlook on the future.  Most households would not be willing to make a vehicle purchase if they did not feel good about their future.  The stock market has reached new decade highs and the net worth of many Americans has increased which may be another reason that some are willing to part with some of their hard earned cash.

In the next several months we will likely see light vehicle sales increase even more as the summer driving season is just around the corner.  It tends to be the case that Americans are willing to make vehicle purchases during the months from February to July.  After these months vehicle sales drop off all the way through the Christmas holiday.  When making a purchase it is also true that more Americans are looking for used car options.  It is no longer the case that every American household wants to lease the brand new Lexus or Mercedes model.  Using Craigslist, AutoTrader and CarMax, individuals are finding that there are much lower prices on used vehicles.  Some buyers are still struggling with bad credit issues so a used car purchase simply makes sense.