December auto sales were decidedly off from a year earlier, though consumers expressed greater optimism after the end of the federal government shutdown.

The year-over-year decline also came as interest rates eased in December and unemployment claims fell for much of the month, Cox Automotive reported. It said the new-vehicle annual percentage rate fell 13 basis points, the used rate by 25 basis points, the lowest rates of the year.

Consumer sentiment, though it revived somewhat after the shutdown, was still down year-over-year in December, Cox said, citing the Morning Consult tracker, which showed a 3% drop. That was still up about 4% from November.

“This week’s reading showed the fifth consecutive week of negative year-over-year growth in consumer spending, a key factor to watch as many market participants look for signs of slowdown in the economy more broadly,” Cox Interim Chief Economist Jeremy Robb said in the report. “Weakness in consumer spending typically shows up first in discretionary big-ticket purchases like vehicles, making these trends particularly relevant for automotive markets.”

Average new-vehicle sales fell 4% year-over-year in the first three weeks of December, used-vehicle sales by about 1%. 

“Optimism doesn’t translate to showroom traffic when consumers are holding off on making purchases,” Robb said. 

“The late-month improvement in weekly sales offers a glimmer of momentum, and we know consumers are about to enter a strong tax refund season. As we enter the new year, watch whether rate improvements can finally convert positive sentiment into actual sales.”

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