Soon, we'll don funny hats, sing "Auld Lang Syne," and participate in the obligatory midnight smooch. Analysts, meanwhile, predict a strong finale for U.S. auto sales for 2003. But what does the future hold for 2004?
Reuters on Tuesday said analysts expect strong sales of new cars from General Motors (NYSE:GM), DaimlerChrysler (NYSE:DCX), and Ford (NYSE:F). However, the late-year surge is due to signs of a strengthening economy and, of course, the lure of incentives.
A month or two ago, indicators gave good reason to expect new cars in driveways and garages, and that has shown itself to be true, considering November's strong sales; December's reports are due Monday. After a few years of tight budgets and caution, it makes sense that the pent-up consumer might want to trade in his old heap and invest in some shiny new wheels (especially with 0% interest rates on financing or those ever-longer power train warranties on repairs).
However, economic indicators released Tuesday may give investors reason to question whether cars will still jump off the lots once 2004 gets under way. Most significant is the implication that consumer confidence, which was showing signs of improvement, got shaky again in December, based on an upswing in the attitude that jobs are difficult to find.
Another holiday story has been the fickle consumer's relationship with retail, with lots of shopping no-shows until the end of the month. This consumer demands some incentive to spend money, implying that she will only open her wallet for sales.
It stands to reason that more people will invest in new cars once they're convinced jobs are plentiful, not to mention that they'll keep their own jobs. However, as testament to the fact that 2003's denouement might have been a good time for new cars -- and, perhaps, to life imitating commercial -- I actually did see a new red car tied up with a giant white bow in a driveway over the weekend. Someone out there's sure to have a good New Year.
Is 2004 going to be the year you buy a new car? Or are you waiting for more proof that the economy is getting better? Drive over to our GM, Ford, or DaimlerChrysler discussion boards.
Alyce Lomax welcomes your feedback at [email protected].
