Ford rocks! but Edmonds.com has caveat for Dec SAAR
Dec Ford vehicle sales were well above estimates as they continue on their impressive rebound. In looking at the seasonally adjusted annual rate (SAAR) today in trying to gauge the state of the economy, Edmunds.com in a press release has some caveats. They said “SAAR is an unreliable metric during periods of economic recession. Why? Recession era buyer psychology shifts behavior in a way that reduces the accuracy of the US BEA established seasonal adjustments upon which SAAR is based. A larger portion of the population could be classified as ‘bargain hunters’ during recessions, and so seasonal discounts draw far more attention than are predicted by the pre-established seasonal adjustments…during a recession SAAR overstates automotive demand in summertime and during the December holiday season, and understates it in most of the rest of the year…Car shoppers have been trained to count on holiday shopping and yr-end deals.”
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January 5th, 2010 at 7:58 pm
Gotta get away from reporting raw numbers and concentrating on each of the car companies’ fundamentals – balance sheets and cash flow. Hell, I can sell 10X more widgets this year at sharply reduced rates (or even, ahem, undercut the competition), but I don’t have 10 years hence to take losses (like the auto industry). As long as they have access to capital, they can sell cars as cheaply as they want. Also, don’t forget the cost of ramping the closed and/or shuttered factories back up when demand increases somewhere in 2013…