Bubble Watch: Southern Californians buying fewer cars
“Bubble Watch” digs into trends that may indicate economic and/or housing market troubles ahead.
Buzz: Southern Californians continue to modestly slow their car-buying pace.
Source: California New Car Dealers Association, which tracks registrations of non-fleet vehicle sales.
Trend reported: Southern California new-car dealers sold 569,633 vehicles in the first half of 2018, down 3 percent in a year. Trucks, with 53 percent of all sales, remain the hot seller. In the region, car sales fell 11 percent to 267,321 while “light trucks” — an industry category that includes the popular SUVs — rose 6 percent to 302,312. In the first half of 2017, sales overall were falling at a 2.3 percent pace.
Dissection: Vehicle sales can be a good sign of consumer confidence. And this year looks to be the second straight year of declines after the statewide peak in 2016.
In 2018’s first half, dealers in Los Angeles and Orange counties saw overall sales fall 3 percent after a drop of 3.3 percent in the previous year’s first six months. San Diego County sales fell 5 percent vs. down 1.9 percent 12 months earlier. And elsewhere in Southern California, which includes the Inland Empire, sales dipped 2 percent in 2018’s first half vs. a decline of 1.5 percent a year earlier.
Statewide sales fell, too, down 3 percent in the year ended in June. Car sales fell 11 percent as truck sales rose 5 percent to take 55 percent of all sales. Also, California’s used car sales also have fallen in the first half of the past two years by a combined 4.5 percent.
Another view: Statewide consumer confidence, as measured by the Conference Board, rebounded from a spring dip to a near-record high for August. And the continued growth of truck purchases — typically pricier vehicles — suggests many consumers are walking into dealer showrooms feeling pretty flush about their finances.
Quotable: From the car dealers’ report: “The market is expected to decline slightly this year, but based on historical standards, new vehicle sales will be very strong.”
PS: Car dealers aren’t the only ones doing less business these days. In 2018’s first half, Southern California homes sales were down 4 percent from a year earlier, according to CoreLogic.
PPS: Please note the regional hiring pace slowed, too: Job growth that had run 3 percent a year from 2013 through 2016 has averaged 1.8 percent since.
How bubbly? On a scale of zero bubbles (no bubble here) to five bubbles (five-alarm warning) … slumping auto sales rate TWO BUBBLES. Perhaps this is a simple cooling from a lofty peak. But numerous data points suggesting consumer unease, even if they’re minor drops, is worrisome.
What apocalypse? Southern California retailing has a new sweet spot