US vehicle sales and NAFTA vehicle production, March 2016.

Both auto and light truck sales in the US dropped abruptly in March to a seasonally adjusted annualized rate (SAAR) of 16.5 million units, down from 17.5 million in February, Figure 1. Auto sales fell by 11 percent, while light truck sales rose 3 percent. Year-to-date sales are 3 percent higher than for the first quarter of 2015. This is not likely to be the start of a trend as consumer fundamentals continue to improve. Moody’s Analytics has expected vehicle sales to ease once pent-up demand was satisfied, because a pace above 17 million units exceeds the approximately 16.5 million units consistent with underlying fundamentals, including the size of the driving population, income and wealth. Light truck sales which include crossovers have been doing much better than autos since mid-2014. In March auto sales were 6.9 million units or 41.8 percent as light trucks were 9.6 million units or 58.2 percent. In March, import market share was 20.6 percent. On April 4th Macro Analyst had a negative slant on future auto sales; “with such a huge amount of auto loan debt outstanding, auto lenders will have to slow loan growth and increase the costs and barriers for an auto loan. Auto lenders already start to be more aggressive in their pricing – which signifies worries about the credibility of borrowers. With more auto loan debt per borrower than ever before I expect a slowing loan growth. Just a slow-down or flat numbers won’t hurt the automobile industry that much. As long as the consumers can pay back their debt in time, everything seems to be fine. But the bigger problem is that we have a bubble here which will have its sudden negative impact once it bursts.”