2010 January Auto Sales

LaFontaine Cadillac Go Green Dealership

One year ago, the U.S. economy was moribund with the cascading effects of the financial crisis, and auto sales were in a deep freeze. In the first month of 2010, auto sales aren't quite as bad, bouncing back a modest 6% from last January's total. Depressingly, that's less than half the year-over-year uptick seen last month: December sales saw a surprisingly healthy 15% increase over the grim prior year. One possible explanation for the weaker January numbers is that December sales were goosed by carmakers' traditional year-end sell-a-thon.

With unemployment stubbornly high -- and those who are still employed jittery about their job security given the layoff-happy mindset prevalent among corporate chieftans today -- consumers are loath to take the new-car plunge without a compelling financial enticement. But automakers, particularly the Detroit three, have (finally!) weaned themselves from overproduction, so inventories are at historic lows and there is little urgency to sweeten the pot for consumers by plopping a big pile of cash on the hood. Luxury-car buyers, meanwhile, may be less constrained by ability to pay than by a desire to avoid flashy purchases.

Without a lot of extra incentives, January's modest gain over last year is probably a better indicator of the actual health of the auto market than December's comparatively rosy outlook.

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