By Spencer Jakab
Look no further than the auto market for evidence that people
don't think ahead.
That doesn't mean we fail to consider current circumstances;
rather, we unrealistically extrapolate from them into the future.
The most amusing example was documented by researchers at The
University of Chicago's Booth School of Business. They determined
warm temperatures or sunny skies on a given day materially boosted
sales of convertibles.
The decision of which car to purchase, or to buy one at all, is
influenced more by economics than emotions, though. So headlines
play an outsize role. Tuesday's reports by car manufacturers on
U.S. auto sales during November should illustrate that
connection.
The big story these days is that oil prices have collapsed to a
five-year low. Add to that the best employment situation of the
economic recovery and borrowing rates that remain near record lows
and it should be little surprise November's outlook is stellar.
Analysts at Cars.com think light-vehicle sales hit 1.285 million
for a seasonally adjusted annualized rate of 17 million. November
unit sales haven't been that high since 2001.
But what comprises those units? Much like that headline number,
the sales mix and actual dollar value is likely to be favorable.
That is particularly so for U.S.-based companies Ford Motor Co.,
General Motors Co. and Chrysler Group LLC (part of Fiat Chrysler
Automobiles), which make the top three selling vehicles, all
pickups. For example, the ratio of sales of typically
more-expensive trucks to cars was 109% over the past three months.
That is more than 10 percentage points higher than the average
since 2008.
Toyota Motor Corp.'s October sales show this in microcosm. Sales
of its Yaris, Scion and hybrid Prius were down by 10%, 15% and 14%,
respectively, year over year. Sales of the pricier but
less-efficient Highlander rose by 30%.
With the average new car remaining with its first owner for
nearly six years, though, basing a decision on today's pump prices
may be hasty. Someone buying a subcompact in the summer of 2008
because crude topped $145 a barrel saw oil plunge below $40 later
that year, surge to $115 by 2011 and then collapse to $66 this
week.
Rational or not, the energy market's tailwinds are like a cool
breeze in Detroit's hair these days.
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