FI showroom red and grey logo
MenuMENU
SearchSEARCH

Auto Sales Drive Rise in Consumer Spending

Fueled by a 1.6 percent increase in vehicle sales in July, the segment that accounts for up to 70 percent of the nation’s economic activity jumped out to its fastest pace in four months.

by Staff
August 31, 2010
3 min to read


Fueled by a 1.6 percent increase in vehicle sales in July, the segment that accounts for up to 70 percent of the nation’s economic activity jumped out to its fastest pace in four months.

Consumer spending rose 0.4 percent in July, the Commerce Department reported yesterday. Sales excluding the automotive segment edged up 0.2 percent.

Ad Loading...

“Today’s increase in retail sales shows that overall economic activity is still growing, although at a more modest pace than we would like,” said Gary Locke, Commerce secretary.

July saw new-vehicle sales cruise to an 11.55 million unit annual pace, the third highest level this year. However, automotive analysts and dealers quoted in the Washington Post questioned whether auto sales are “on an upward arc or whether they are just treading water.”

Experts quoted in the story linked the rise in auto sales to an increase in incentive spending and fleet sales, a sentiment backed by an August report issued by the NADA Used Car Guide. However, an analyst for the guide said the jump in fleet sales isn’t necessarily a bad thing for the still-recovering auto industry.

Jonathan Banks, an analyst for the NADA Used Car Guide, wrote in his August report that automakers have shifted from the push-based sale strategy to brand building. He pointed to fleet sales as an example.

Once viewed as a means to dump products in an overcapacity environment, fleet sales are now viewed as key profit centers for manufacturers, Banks wrote. This shift in strategy could push a higher supply of one-year-old vehicles into the used market next year, which has been hampered by supply problems.

Ad Loading...

“The automotive industry has retooled itself to adapt and thrive in an environment of less than 12 million new-vehicles sales,” wrote Banks. “OEMs have significantly cut their products to better align supply with demand, while the dealer focus has shifted to used-vehicle sales and service revenue to maintain profitability.”

Banks, however, noted that July trends did reveal that consumers are becoming more frugal, as many continue to shy away from high-dollar vehicles in the still-weak economy.

With the rise in spending, the personal savings rate slowed to 5.9 percent of after-tax income, down from a high in June of 6.2 percent. However, even with the decline in July, the saving rate is nearly three times higher than it was before the recession began in December 2007.

The fear now is whether the more-frugal consumer will hamper economic growth and the economy’s recovery.

Economic growth in July slowed to 1.6 percent in the April-to-June quarter. That was revised down from the initial estimate of 2.4 percent. Most private-sector analysts, however, had expected a revision to 1.4 percent.

Ad Loading...

“The downward revision to GDP growth stemmed primarily from unusual and surprisingly large swings in inventories and net exports late in the quarter,” said Under Secretary Rebecca Blank. “Although the economy has slowed somewhat, American consumers increased their spending for a fourth consecutive quarter with disposable personal income increasing at more than a 4 percent annual rate. Business investment also grew at a solid pace. Investment in equipment and software specifically grew at more than a 20 percent annual rate for the second straight quarter.”

More F&I

Man holding magnifying glass over sales volume paper.
F&IMay 29, 2026

Why Your F&I PVR Is Misleading You

Here’s a handy checklist of the numbers to track in 2026 instead.

Read More →
Photo of woman typing on a laptop as she sits on a couch
F&Iby Hannah MitchellMay 29, 2026

Auto Consumer Anxiety Presents Opportunity

A survey of U.S. drivers found the majority are concerned about finances and the economy, but those fears make many ready to buy vehicle-protection products.

Read More →
Dustin Gingerich standing on stage giving a presentation
F&Iby Lauren LawrenceMay 28, 2026

Humble and Hungry: 12 Rules for an F&I Life

Dustin Gingerich, with a decade in the F&I business under his belt, shares his thoughts on leadership, building trust with customers, and the importance of learning and innovation.

Read More →
Ad Loading...
Photo of businessman's hands resting on files on a desk
F&Iby John TabarMay 27, 2026

Focus on the Opening

F&I managers must learn as much as possible about their customers, starting before they walk into their offices. The bulk of today’s consumers expect that, and good results will follow.

Read More →
Photo of a three-seat vehicle back seat
F&Iby Hannah MitchellMay 22, 2026

F&I Reaches for the Sky

The increasingly important profit center continued making gains in the first quarter, according to StoneEagle data, ancillary products proving more popular as consumers hold onto their buys longer.

Read More →
Cover image for a BOK Financial report titled “Timing the market: How avoiding volatility entirely can hurt long-term reinsurance program performance.” The image shows several road construction barricades with flashing amber warning lights lined up in a nighttime work zone. Beneath the image, red text explains that avoiding volatility can mean falling behind inflation and missing market rebounds that drive long-term surplus growth. The BOK Financial logo appears at the bottom right.
SponsoredMay 8, 2026

Timing the Market Can Hurt Long-Term Program Performance

For dealer-owned reinsurance entities, avoiding volatility entirely can mean falling behind inflation and missing market rebounds that drive long term surplus growth. Missing just a handful of strong market days can materially impact cumulative returns—an important reminder for long horizon trust and investment strategies.

Read More →
Ad Loading...
Ryan Ruff, The 90/10 Rule, Automotive Training Academy, Sales Series
F&IMay 6, 2026

The 90/10 Rule

In this video, Ryan Ruff explains the rule that elite sales professionals use to turn ordinary conversations into unforgettable customer experiences.

Read More →
Photo of essential oil diffuser on desk next to laptop
F&IMay 4, 2026

Your Office Is Talking

What’s the atmosphere saying about you to your customers? You can make minor adjustments and additions that transform your space into one that creates trust with the people on the other side of the desk.

Read More →
"Effective training ensures the customer’s needs remain at the heart of everything we do. When that is the focus, both sales and profits naturally improve." by Rick McCormick with F&I and Showroom logo and picture of Rick McCormick
F&IMay 1, 2026

F&I Training Fundamentals

How can auto dealerships help F&I managers fulfill their vital role in the most effective ways? Industry expert Rick McCormick shares his insights on the best ways to train these professionals and help them maintain good habits.

Read More →
Ad Loading...
Photo of car tire and the tread mark it left in snow
F&Iby Hannah MitchellApril 29, 2026

Not Just Any Tire Will Do

More consumers and businesses are opting for all-season options for various reasons as safety, sustainability and convenience push practical change.

Read More →