Demand for cars and trucks is up and August 2012 sales hit a high not seen in the last six months. The thought is that consumers’ wishes to purchase automobiles are taking priority over their willingness to spend in other areas.
The August jump equaled 0.9 percent, beating July’s 0.6 percent reported by the U.S. Commerce Department this week. Consumers chose autos over department stores, apparel and electronics, and these businesses showed a definite slowing as a result. This translated to a 1.3 percent increase in sales for dealerships, which is the most in the last six months. Other retail purchases not including cars and trucks rose 0.8 percent.
Sales numbers from Ward’s Automotive Group showed light trucks and cars sold at 14.5 million annual rate in August, which was the best since 2009 for the industry, beating the 14.1 million for July of this year. Chrysler Group LLC’s gain was 14 percent, and General Motors Co. came in with a 10 percent rise.
All over the U.S., consumers are experiencing soaring food and gas prices and smaller gains in wages; the need to be fiscally conservative is causing problems for retailers like Koh’ls Corp. and Macy’s Inc. The Federal Reserve had to take measures last week to encourage the three-year expansion.
Millan Mulraine, senior U.S. strategist at TD Securities in New York, had this to say: “You can take some encouragement from this, but it’s probably not as strong as the headline number suggests. The price of gas will probably make a dent as it diverts from discretionary spending.”
The Labor Department also reported this week that the jump in consumer prices for August was 0.6 percent; this is the most since last summer. The culprit was a 9 percent rise in gasoline costs which accounted for a whopping 80 percent of the increase. In addition, energy prices and food prices both increased during August.
Gasoline service stations saw a rise in sales of 5.5 percent in August due to higher gas prices, which was the most since November of 2009. This number from the Commerce Department has not been adjusted for inflation. Gas prices are up to an average of $3.87 per gallon.
Despite the numbers in other areas of commerce, consumer interest in automobiles is higher now than in a long time. Consumer sentiment improved in September, says a report from Thomson Reuters/University of Michigan. Their calculated preliminary index of consumer sentiment rose from 74.3 in August to 79.2 in September.