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Being a journalist, I believe it’s really important for business owners to be aware of what is happening (whether we like the information or not) so we can make intelligent business decisions. It’s no secret the U.S. economy is facing some tough challenges in 2008. The first quarter was especially rough, capped by a slew of dismal economic data in March. However, there is good news, too! I’ll start with the bad news to get that out of the way, and end with the positive.
New truck and SUV sales have dropped universally by double digits in March. General Motors’ March truck and SUV sales were down 22 percent. Ford reports its March truck and SUV sales dropped 16 percent. Toyota Motor Corp. says March sales were down 14 percent. Nissan was down 20 percent and Honda down 12 percent.
According to the American Bankers Association, consumers’ auto loan payments made to dealerships (indirect auto loans) are being made late at the highest rate on record — 3.13 percent. Late auto loan payments to banks (direct auto loans) are at a 2-1/2-year high of 1.9 percent. Those are the sad, but true, facts.
The good news is this means almost 97 percent of people with auto loans are making their payments just fine. It also means that while new unit sales are down, hundreds of thousands of new trucks and SUVs are being sold this year. While the general media tends to focus on the doom and gloom, it fails to point out how many people are actually in the market for new vehicles and aftermarket upgrades.
Other things to consider: summer is nearly here and economic stimulus checks will be in the mail soon. Consumers tend to open their wallets when the sun shines, and for those who are not late on their payments (again, 97 percent), the stimulus checks amount to “free money.”
My guess is the government is right on target with this program. Consumers are going to run right out and splurge on completely discretionary purchases, boosting the economy. There will be a ton of industries and businesses clamoring for those free government dollars. The pot is huge. I can’t think of a better time for businesses to touch base with customers and step up marketing efforts with advertising. March was the calm before the storm. A Katrina-size flood of money is coming. If this info doesn’t gas your engine, nothing will.