Today we learned that U.S. car companies had a good month in September, defying what the world sees as a weak American economy.
General Motors said year over sales were up 20 percent; Chrysler's were up 27 percent. Ford was the laggard with a 7-percent gain but showed an increase nevertheless.
So Detroit is thriving in a lousy economy. Why?
We spoke to Michael Robinet, auto analyst at IHS Automotive. He agrees that the sales figures are positive news, "not blockbuster," but certainly good. Robinet reminds us that this September's figures are in comparison to last September, when the auto industry was just beginning to come out of what he called an industry "depression."
Still, Robinet says the auto industry was primed for a comeback for several reasons. He says that the recession - which nearly destroyed GM and Chrysler - resulted in people putting off buying a new car as long as possible. Today, many of those people can't wait anymore, so the pent up demand is turning into new car sales.
We pointed out that much of the sales increase is due to sales of pick-up trucks and SUV's. Part of that demand is because of lower fuel prices. But Robinet also points to pent-up demand in the agricultural sector where farmers and the like are replacing older vehicles. Also he says high-commodity prices are good news for the rural market which in turn is good news for car sales.
Robinet also says that part of the story for U.S. automakers is the ongoing trouble in the Japanese auto industry, which is still struggling to return to form after March's earthquake and tsunami. The lack of Japanese product has led some Americans back to the showrooms of American car makers. Toyota and Honda today both reported lower sales in September compared with the same month a year earlier.
But, Robinet says, don't break out the champagne just yet. He's still cautious. The auto sales news was good today, but he says he's looking for this good news to continue through the fall and into 2012. Apparently, one month does not make for a full-on recovery.
Also on the show, news that the Fed turned a healthy profit in 2010 thanks to a surge in interest and fees earned off of the money it loans to banks and institutions, sent the Marketplace Daily Pulse racing today.