BANDON, Ore. — Research from CNW Research shows a market correction in November after a “strange October,” a month marked by a partial government shutdown, purchase delays on the part of consumers, and then a sharp reversal in the second half of the month.
According to the research firm, all indicators point to sales increasing 10 percent to 1.2 million units delivered in November. But the data wasn’t all positive.
CNW’s Jitters Index had already reached historic highs before climbing another 1.3 percent in November. The increase, according to the firm, was due to federal taxes, the Affordable Car Act (ACA) and home-centric budgets for healthcare coverage.
“Nearly 80 percent of the monthly survey sample said the ACA would ‘Significantly’ or ‘Greatly’ hurt their family budget,” wrote CNW’s Art Spinella. “This included consumers who have yet to be impacted by charges in the healthcare law, such as people with employer-based insurance coverage.”
November was also marked by another slip in subprime approvals, which inched down 0.92 percent vs. October. Floor traffic, however, jumped more than 15 percent. Spinella attributed the pickup to consumers returning to the market after delaying purchases in October due to the government shutdown.
Looking at same-store sales, CNW noted a 6.81 percent increase in sales through the first three weeks of the month. When added to the boost in floor traffic and higher closing rations (up 5.4 percent), the profitability of dealerships (both small stores and public groups) should rise accordingly this year, Spinella noted.
“When consumers decided to postpone a new-vehicle acquisition because of the partial shutdown of the federal government, Pent Up Demand figures soared 25 percent in October, with an average anticipation delay in making the acquisition rising to 3.4 months,” Spinella wrote. “When the shutdown ended, however, many of those consumers returned to market much quicker than even they expected, bolstering October sales data.
“But the backlog of demand continues,” he added, noting that November’s preliminary figure is 116,500, up 6 percent form a year ago and the highest monthly number since February.
“Similarly, the percentage of postponers who said they would come back to the market within six months jumped to nearly 97 percent, clearly indicating they were set on making an acquisition within a modestly short timeframe,” Spinella added. “For November, virtually the same high percentage of postponers say they plan to buy a vehicle soon, another solid indication of a positive outlook for 2014.”