The US automobile industry continues to act as a bellwether for economic recovery with March car sales remaining robust. Conversely, however, orders for factory goods dipped slightly, warning that the world cannot yet take US economic recovery for granted.
On the auto front, however, the only cloud on the horizon is the continuing loss of market share by domestic manufacturers to foreign rivals. Even a pyrrhic price war between the Big Three carmakers – massive rebate offers and interest-free finance – failed to halt the rise and rise of US consumers’ enduring love affair with foreign marques.
Aided by favorable exchange rates, the likes of Toyota, Honda, Nissan, Volkswagen and BMW continue to steal share without the incentive profligacy of the Big Three. And to rub salt into an open wound, Korea’s largest carmaker Hyundai (March sales up by almost 15%) has just announced plans to open its first stateside plant in Montgomery, Alabama. Sales at the company's Kia offshoot also rose 11%.
According to Ward's AutoInfoBank, year-on-year car industry sales were just 1.5% down on March 2001, bettering the expectations of most analysts. “It is becoming increasingly clear that a broad-based recovery is taking hold,” opined Ford's senior domestic economist Jarlath Costello. “The recession in manufacturing is clearly over.”
Less cheering was the news from the Commerce Department which reported a marginal fall of 0.1% in the value of factory orders during February. The seasonally adjusted figure of $328 billion (€373.28bn; £228.24bn) fell below Wall Street’s expectations of a 1.0% increase in factory orders.
Most of the slippage is attributable to a decline in nondurable goods, whereas new orders for more costly durables such as autos and furniture moved up 1.8% to a seasonally adjusted $180.48 billion. This rise followed an increase of 1.6% in January, suggesting that the long-suffering manufacturing sector is beginning to get back into shape.
Data sourced from: New York Times; additional content by WARC staff