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Michigan GMC Dealers and Consumers: Top 4 Reasons September Sales Soared

Despite incredibly poor economic conditions, automakers were able to make a big turnaround in light vehicle sales for September, marking the best month since April.

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Oct. 6, 2011 - PRLog -- DETROIT, M.I. – Michigan GMC dealers contributed to a sales gain of more than 25 percent for General Motors full-size pickups as compared to last year, and all across the board, dealerships saw an increase in foot traffic for the month of September for many of the models they sold.
As a result of September’s positive numbers, surprised industry analysts have increased their seasonally adjusted annual rate from 12.6 million through September to 12.8 million.
This good news amid a still struggling economy suggests that U.S. auto sales may still be able to finish out the year strong and not backslide into dangerous territory.
The Results
The Detroit Three saw the biggest year-over-year increase with GM growing by 19.7 percent, Chrysler by 27.2 percent and Ford rounding out the three with a 9 percent gain. Nissan achieved a 25 percent gain, separating itself from both Toyota and Honda, two automakers whose year-over-year sales fell 17 percent and 8 percent, respectively.
Overall, U.S. auto sales increased by 10 percent, but why?   
Top 4 Reasons for September Auto Sales Gains
1.   Gas prices decrease
According to AAA, as of Wednesday, the current average for regular gasoline is $3.39, with Michigan having an average fuel price of $3.46 to $3.36 per gallon. A month ago, the average regular fuel price for Detroit was $3.87, more than a dollar higher than the $2.78 Detroit average for October 2010.
Though the national jobless rate is still 9.1 percent, this decrease in gas prices has prompted truck buyers to visit their Michigan GMC dealers for the truck or SUV purchase they’d been holding out for.
“For GM, all of the factors that say this is a good time to buy a new vehicle outweigh the bad news that appears to be slowing down the broader economic recovery,” said Don Johnson, vice president, U.S. Sales Operations in a press release. “We’re well positioned going forward because we have momentum and another wave of fuel-efficient passenger cars launching over the next several months at Chevrolet, Buick and Cadillac.”
2.   Product drought is over
It’s been almost seven months since the disastrous Japan earthquake and accompanying Tsunami. As a result, Japanese automakers sustained major damage affecting production worldwide which cut back inventory supplies dramatically.
This supply drain caused used car pricing to soar as the summer’s gas prices continued to rise and many consumers were left waiting weeks for new foreign-make models or paying exorbitant pricing on pre-owned vehicles.
North American Toyota production returned to 100 percent in September, but the automaker was still down 17.5 percent from last year’s numbers. Honda has moved past parts supply issues as well, but like Toyota, it also suffered a loss in numbers, down 9 percent from 2010.  
Regardless, more light vehicles and small cars became available to consumers and they bought despite the economy.
3.   Pent Up Demand Overrides Economic Indicators
By all accounts, the economy gave consumers many reasons to hold tight to their wallets, but for many, it still wasn’t enough to keep them from Michigan GMC dealers and dealerships of other popular brands.
For September, the U.S. jobless rate was 9.1 percent, housing starts were low, the Dow Jones Industrial Average (DJIA) was nowhere near peak performance and the consumer confidence index—an indicator used to measure how optimistic consumers feel about the economy based on how they spend and save—was also down to 45.4.
However, for some people, they just couldn’t put off a car purchase any longer.
“It has changed from ‘I’m going to wait until the economy improves’ to “I still don’t know about the economy, but I’m going to buy a new car anyhow,’” said Jesse Toprak, vice president of TrueCar.com in an Automotive News article. “People are buying because they have to: Their lease is up, they have another child or their car broke down.”
This change in attitude is a very strong signal that consumers will continue to buy despite the economy.
4.   Redesigned models making their debut
Consumers may have also been sitting on the sidelines as they waited for the 2012 models to start rolling out at dealerships. As more of these models are hitting the market, dealerships are more apt to clear out the 2011 models by offering sales and incentives which draw in more buyers.
Making more room for the new wave of models is not the only reason customers will see more incentives at the dealerships. Now that Honda and Toyota have the inventory to compete, they’ll be coming out in force to try and make up for lost time. In turn, domestic automakers will be doing all they can to reduce their large inventories.

Though many don’t expect U.S. auto sales to slow down for the remainder of 2011, it will be interesting to see how the momentum continues through October.
[Source(s): Automotive News, Detroit Free Press, The Detroit News, CNN Money, Autodata, CBS]

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