Goodbye Polar Vortex, hello low gas prices.
That’s the story for carmakers, which are reporting solid January sales increases.
You may recall that nasty winter weather last year took a big bite out of January auto sales. This year, better weather and the plummeting price of gas brought out buyers in droves.
A common theme among all the Big Three -- sales were driven by demand for trucks and SUVs.
For example, sales of Ford’s newly-designed F-150 pickup shot up almost 17%, Chrysler’s Jeep brand gained 23% and GM’s GMC truck and SUV models rose a whopping 29%.
Yahoo Finance Editor-in-Chief Aaron Task says car companies like these kinds of numbers a lot.
“Automakers feel really good about them because they’re selling more trucks and SUVs which have higher margins and go right to the bottom line,” he points out. “It’s great for their profitability.”
Demand for bigger vehicles has risen as gas prices have headed in the opposite direction. Triple-A says the nationwide average for a gallon of regular back in June was $3.68. Today it’s $2.07. And Task says that’s made a big difference in the mentality of American consumers.
“We did see in the GDP report that came out Friday one of the big bright spots was personal spending,” he notes. “So the U.S. consumer has been taking the savings from falling gas prices and saying, I can go out and replace my vehicle. And AutoNation’s (AN) numbers this morning were really strong, and they’re forecasting 17 million annual sales this year, which is higher than any of the forecasts I’ve seen. So they’re expecting this to continue the rest of the year.”
Still, Yahoo Finance Senior Columnist Michael Santoli says let’s not get too excited here.
“Last year was weather impacted—nobody could get to the dealers because of the storms,” he points out. “And certainly gas prices have helped. So we had a couple of things working in favor of this year over last year’s numbers.”
And Task finds it amusing how companies only point to the impact of Mother Nature when it’s convenient.
“Nobody ever credits the weather for good numbers,” he jokes.
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