It’s been a source of constant surprise to the auto industry how quickly auto sales have risen in all sectors. People from all walks of life, from Millennials to Boomers, from the working classes to the upper class, have been buying more cars at higher prices, setting a rate of sales unprecedented in recent years. But it looks like sales moderated in March, cooling off for at least a month.
Cool Sales Weather
It’s worth noting that an uninterrupted streak of higher sales isn’t entirely unusual in the automotive industry. In fact, March numbers came in at .6% above March 2014 sales. Not exactly world-beating, but it does mean that the industry continues its streak.
Also, the overall estimates of decline were very, very low. The most pessimistic estimates believed March sales would decline compared to last year by a whopping … .8%. No, we didn’t misplace a decimal point; even the darkest predictions only foresaw a decline of less than one percent. And even if the “worst” did come to pass, US auto dealers would have moved 17 million cars off their lots in March 2015.
Still, it is worth asking why an industry that’s seen steadily rising sales might be jittery about a sudden dip. The answer, it turns out, has more to do with the weather and the calendar than it does with the economy.
In fact, the economy is booming; unemployment is down across the country, the Consumer Price Index has risen slightly, reflecting strengthening sales, and overall, the economy appears to be making a turnaround. People are working and thus buying new cars. No, the problem isn’t the money in people’s wallets; the problem is getting them to the dealership to spend it.
Simply put, in March, dealers were fighting two factors they couldn’t control. The first was the awful winter much of the country experienced at the beginning of the year. Being hammered by snow storms, floods, ice storms, and a litany of other woes largely kept people indoors, and they are now eager to enjoy the good weather whenever they can. Many potential new car buyers are simply more focused on buying gardening supplies or pumping out their basements than buying a new car.
Second, there was the fact that this March had fewer weekends than in recent years. Predictably, Saturday and Sunday are often the best days of the week for car dealerships; it’s when they see the majority of their customers. The fewer weekends a month has, the more likely dealerships are to sell fewer cars.
It’s not expected that this sales “slump” will last; many believe that as April rolls into May and we get complete sales numbers for April we’ll see a higher rise. But, for now at least, car dealerships will just have to accept an unusually cool March.